Guernsey’s QROPS (Qualified Recognised Offshore Pension Scheme) industry has taken another hit this week as Her Majesty’s Customs and Excise (HMRC) publish its new QROPS authorised list (view here to see the list). The number of qualified schemes has reduced from 313 down to only 3 since during the last month.
This is much to the consternation of the Guernsey Association of Pension Providers (GAPP) which has worked in tandem with the Guernsey Income Tax Office (GITO) to mitigate the new regulatory requirements of the HMRC.
One of the principle issues which the HMRC were not happy with is that the 310 schemes which have been removed from the authorised list did not satisfy the new “residents-only” policy. While there is no concern that existing and previously set up QROPS policies will be affected, any future deposits will be affected by the new regulations.dents-only’”.
What is worrying the Guernsey schemes even further is that the HMRC are looking to invoke further regulations which would seek to remove and disqualify the “one size fits all” 157E schemes from their authorised list. 157E Schemes were brought in by the Guernsey Income Tax Office only recently to meet the requirement by the HMRC in order to fit in with the concern established back in December with regards the 3rd country QROPS policies. This new 157E programme still perceives both Guernsey residents and non-residents under the same rule i.e. that they will not have to pay any tax on the benefits which are paid out by the QROPS Scheme.
The Guernsey Income Tax Office have now stated on a number of occasions, most recently this week as they felt that they had been working hard to meet the requirements of the HMRC and if the “goal posts” kept on moving it was making it impossible for them to establish appropriate schemes.
There is clearly a desire by GAPP and GITO to continue to work hard to adapt their existing schemes to fit in with the changing policy, and the concern has been that what has become a large, lucrative industry for Guernsey will see a sudden and immediate drop off.
The HMRC were not willing to discuss the Guernsey position on its own but they were adamant that QROPS were not established to provide tax advantages to those wishing to move their UK pension offshore. They are adamant that the new regulations brought through by George Osborne, the Conservative Chancellor, on QROPS must meet a number of specific criteria, in particular both non residents and residents must be treated the same in a jurisdiction with regards their tax relief. This is known as the benefits tax relief test.
No doubt there will be a considerable amount of hard work being done in Guernsey working on how to adapt their regulations and schemes to fit in with the new amendments. A frustrating time for all but the UK Government is determined to close any potential loop holes and make sure that both the spirit and the letter of the QROPS policies are being met.
For more information on this and on QROPS advice please contact us here.