HMRC “appears to have targeted Guernsey in its review of QROPS providers, as set out in the latest list of recognised QROPS schemes published today”, the Guernsey Association of Pension Providers (GAPP) said in its statement, which may be viewed on its website.
“Not only have the schemes of leading QROPS providers been delisted, but so have the schemes of major employers, including the States of Guernsey scheme for public employees,” the organisation added.
What is more, while Guernsey saw 99% of its existing QROP schemes removed from the list, the number of schemes of many other “have remained broadly unchanged”, the GAPP statement pointed out.
Stunned by decision
The decision by HMRC to delist most of Guernsey’s schemes has stunned pension providers and government officials in Guernsey, where the administration of QROP schemes has become an increasingly important source of revenue and jobs on the island.
Guernsey has accounted for at least 10% of all QROPS transfers since the schemes introduced, as part of the A-Day pension reforms, in 2006, according to HMRC data obtained through a Freedom of Information Act request last year by Concept Group, one of the island’s major QROPS providers. And in the first part of 2011, the jurisdiction was the No. 1 destination for UK pensions transferred into QROP schemes, with around 32% of the total in terms of numbers transferred.
‘Actively complying’
In its statement, GAPP noted that Guernsey has been “actively complying” with new QROPS regulations introduced by HMRC on 6 April, and had even “introduced new pensions legislation, known as Section 157E, to provide further alternatives for pension savings in Guernsey”. This new legislation, it added, met HMRC’s new QROPS requirements.
“Thus Guernsey pension providers are extremely concerned that HMRC does not appear to have followed the regulations it itself introduced on 6th April, but instead has appeared to create a new and previously unpublished requirement, that only schemes with membership restricted to Guernsey residents will qualify in future.
“GAPP is unclear how this meets the current legislation introduced in the UK, and awaits further clarification from HMRC about this latest change as a matter of urgency.”
The organisation went on to say that it fully accepted the UK Government’s right to make its own rules about the treatment of UK tax-relieved pensions savings.
However, it added that it “does expect that HMRC will apply its rules openly and fairly”.
“It [GAPP] also expects HMRC not to discriminate against territories such as Guernsey, which have sought over the years to meet HMRC’s requirements fully, and hence to favour territories where there may be a more liberal approach to meeting these requirements.”
GAPP said it will continue to work with Guernsey’s income tax office to find a solution that is both equitable for Guernsey and which meets the requirements of HMRC.
‘Return to less restrictive regime’
In the GAPP statement, its president, Stephen Ainsworth, expressed the organisations frustration that "HMRC, having set out its detailed rules, then seeks to set them aside without notice in order to meet an unpublished policy objective".
"This change, if confirmed, will leave many UK expatriates without the opportunity to move their pension savings to a secure jurisdiction of their choice," Ainsworth added.
“Indeed, even Guernsey residents are adversely affected by the current HMRC stance since most pension schemes, whether in Guernsey or the UK, do not include the territoriality restriction that HMRC now demands for Guernsey QROPS.
“We hope that there will be an opportunity to return to a less restrictive regime, as the QROPS list continues to be reviewed over the coming weeks.”
