The action, which was announced last month, follows a decision by HMRC to remove the Recognised Overseas Self Invested International Pensions Retirement Trust (Singapore) from its list of registered QROPS in 2008. A raft of court cases followed in which it was finally ruled that the scheme had never been a QROPS and therefore that any transfers to it were unauthorised and would elicit a 55% tax charge.
Dorsey & Whitney, the lawyers acting for the investors, said HMRC had already commenced issuing “assessments to tax” – essentially asking for the 55% tax – on 2 April this year. Since then the law firm says nearly half of the 122 members affected have contacted them with regards to the case.
The group argue HMRC was wrong to de-list the scheme and that it is not entitled to raise assessments against them for three main reasons.
First, Dorsey & Whitney argue it is a breach of EU law, as the transfers are protected as a movement of capital between the EU and a non-EU state.
Second, the firm argues it is a breach of Human Rights law as “the assessments are being made in circumstances where a taxpayer could not have foreseen that, as a consequence of their actions, they may later be subject to a tax charge or penalty”.
Perhaps key to the case, is the law firm’s final point which is that the listing of ROSIIP as a QROPS gave investors a legitimate expectation that transfers “would not attract an unauthorised payment charge”. Dorsey and Whitney added: “under English public law, if a taxpayer has acquired a legitimate expectation that he/she was entitled to a particular tax treatment, this also extends to a legitimate expectation that that tax treatment would not be changed retrospectively.”
Dorsey & Whitney do warn however, that clients who have received assessments from HMRC must act quickly as the deadline for a judicial review, under which this litigation will fall, is three months from the date the client received the assessment – which could have been as early as April.
The law firm added that it is anticipated that a timetable for the litigation will be set by a management judge relatively soon – possibly early next month.
