The Recognised Overseas Self Invested International Pensions Retirement Trust (Singapore) (ROSIIP) was stripped of its QROPS status in May 2008 after HMRC deemed it did not meet the requirements at the time it was registered. Because of the Revenue’s decision, the 122 investors who used the ROSIIP QROPS between 2007 and 2008, which was promoted by a company called Panthera, could now face an “unauthorised payment” charge of up to 55% of the original transfer value of their pension.
ROSIIP trustee, Equity Trust (now TMF Trustees), has since fought a legal battle with HMRC over whether or not QROPS status should have been removed, but have so far lost at each stage. Most recently in March, the company lost an appeal against a High Court ruling which found in favour of HMRC in May 2011.
Dorsey & Whitney, the lawyers acting for the investors, said HMRC commenced issuing “assessments to tax” – essentially asking for the 55% tax – to some investors around 2 April this year, with further assessments expected to follow in July.
The law firm argues HMRC are not entitled to raise assessments against its clients 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.”
