Boal and Co. the Isle of Man actuary and pension consultants have had to temporarily remove one of their Qualified Recognized Offshore Pension Schemes (QROPS) as a consequence of the new regulations brought in by the Her Majesty’s Customs and Excise (HMRC).
Boal and Co. have over 15 years experience providing pension advice and from 2006, when QROPS were introduced by HMRC, established their Trinity scheme under the 50c (Isle of Man) legislation. 50c legislation allows non-residents to not be taxed on benefits but residents would be taxed. This is in contravention of the new HMRC regulations which are being in-acted on 6 April 2012.
The reason that the Trinity Scheme is in breach of the new rules, and why Boal and Co. have preempted braking the HMRC new rules by de-registering their scheme. The new rules state that QROPS providers must treat non-residents and residents alike. Unfortunately for Boal and Co. the Isle of Man has not moved fast enough to update their 50c legislation in line with these new regulations, to the frustration of many pension holders wishing to enter into new QROPS.
Boal and Co. is one of only a few pension providers on the Isle of Man who have had to remove their QROPS plan. Their Managing Director, Gary Boal is incredibly frustrated and irritated by the apparent intransigence of the Isle of Man Association of Pension Scheme Providers (APSP) to move quickly to rectify this situation.
The Isle of Man APSP claim that they wish to spend some time analyzing the newly introduced regulations and not make any knee jerk reactions.
Fortunately, according to Gary Boal, there will be no repercussions for existing members as the HMRC is not able to go after QROPS plans retrospectively.
Many QROPS providers are having to reevaluate the schemes that they are offering, not just in the Isle of Man, but also countries like Guernsey, Jersey and Gibraltar. The changes that are taking place from 6 April 2012 and introduced by Chancellor, George Osborne in his budget of 22 March 2012 are looking to halt the apparent abuse of some individuals of the QROPS plans. He felt that the letter of the schemes was being met but not the spirit.
For example he has introduced a 10 year reporting period for all QROPS plans back to HMRC against the existing 5 years. This shouldn’t be a concern to people that are looking to retire abroad as the majority of them will easily meet this rule. The other main amendment is that QROPS plans can no longer in-cash 100% of their fund. Rather they are now only allowed to cash in up to 30% against the 25% which is currently allowed in the UK.
Here at MyQROPS.net we are keeping a close eye on the new regulations that are being introduced and have made sure that the advice which we are able to provide is inline with these. The worry of many is that if HMRC continues to constantly amend and update their regulations that mistakes and confusion will reign. For more information on QROPS in the Isle of Man or any other information please contact our experts here.