Administrators of QROPS in Gibraltar are holding off transfers of funds of UK clients into their pensions pending resolution of a tax query raised by HMRC.
As International Adviser has reported, HMRC is understood to have concerns over Gibraltar’s 0% income tax charge on pension income for the over-60s, and has sought clarification from Gibraltar’s six QROPS administrators, who are represented by the Association of Pension Fund Administrators (APFA).
APFA says it has responded to queries from HMRC, which set a deadline of 30 August, and is awaiting a decision.
David Erhardt, chairman of APFA, stressed that HMRC “haven’t frozen the transfers to Gibraltar – we have ourselves, though I wouldn’t say ‘frozen’ is the word”.
“Gibraltar is still on the [HMRC’s] list [of approved QROPS jurisdictions],” Erhardt added. “If you were to phone HMRC and say you wanted to transfer a pension fund to Gibraltar, they would say fine. They would recommend that you seek independent advice, but they would say that anyway.
"What has happened is that HMRC has asked question about the tax regime in Gibraltar, and until the matter is resolved, we have applied the brakes on the final transfer [of funds into QROPS]. This is because under the worst-case scenario, if HMRC were to withdraw approval, our clients could face a tax charge of up to 55%, and we do not think it is fair to them to put them in that position.”
Erhardt says Gibraltar’s QROPS administrators are “taking applications and processing them, right up to the point of the final transfer”, and says clients “are very happy” with the arrangement.
“We are confident this matter with HMRC will be resolved,” he adds.
An HMRC spokesman said it does not comment on matters involving individual companies, adding: "I can confirm however that HMRC does not have the statutory power to suspend pension fund transfers to schemes based in any jurisdiction.
"HMRC has an ongoing duty to review and consider whether the tax relief condition is met by any jurisdiction, including Gibraltar, in which a scheme that has applied to be a QROPS is established, and will continue to do so."
As reported by International Adviser magazine last June, HMRC in 2008 stripped all Singapore-based QROPS of their approved status.
