The UK Treasury has agreed to recognise Gibraltar Qrops, following high level talks between Treasury officials and Gibraltar chief minister Peter Caruana, sources told International Adviser.
A spokesman for HM Revenue & Customs declined to confirm the report, however, without providing details or addressing the Gibraltar situation specifically.
He reiterated the Revenue’s previously-stated position that there are “a number of generally-applicable conditions that have to be met in order for a pension scheme to be eligible to be a QROPS”, and said HMRC will “continue to… review and consider whether the conditions to be a QROPS are met by any schemes that have applied”.
The HMRC statement conflicts with reports out of Gibraltar, where a source familiar with the status of negotiations between it and the Treasury said an agreement "has been reached that resolves the issue, to the satisfaction of the industry in Gibraltar and the government in Gibraltar, as well as the UK Treasury”.
Caruana did not return phone calls seeking comment.
Details on the deal were not available, but it is understood that it would oblige some aspect of law in Gibraltar to be amended to satisfy HMRC. The legal change is expected to be introduced early in 2010.
Since the middle of last year, trustees of Qrops in Gibraltar have voluntarily suspended pension transfers from the UK, pending resolution of HMRC’s concerns. The Revenue’s concerns first came in the form of letters received in the spring by Gibraltar pension trustees which asked them for clarification of local rules regarding taxation of retirement income.
Gibraltar taxes the pension income of people over 60 at 0%, and it is this provision that is the focus of HMRC’s concern. HMRC is said to regard a 0% tax as inconsistent with Qrops regulations.
Gibraltar Qrops administrators will be delighted to hear that the agreement has been reached, since news of the UK tax authorities’ interest in the matter and the suspension of pension transfers has damaged Gibraltar’s Qrops industry’s image, while giving rivals in other jurisdictions an advantage.
In recent weeks, many Gibraltar Qrops administrators had become increasingly critical of HMRC’s continued delay in approving Gibraltar as a qualifying destination.
News of the deal between Gibraltar’s Qrops administrators and HMRC came as Qrops Adviser, a Brussels-based advisory business, reported on its website that HMRC was considering removing "hundreds" of Qrops from its register of recognised providers as part of a tax crackdown. Again, HMRC declined to comment specifically.
Qrops, or Qualified Recognised Overseas Pension Schemes, are a form of pension based outside of the UK, which is recognised by UK authorities as being eligible to take transfers from registered UK pension funds. They were introduced out of the A-day changes to UK pension regulations that took effect on 6 April, 2006.
