Fears that Gibraltar could be struck off Qrops list
Gibraltar pension trustees have halted UK transfers to overseas pension schemes until an HM Revenue & Customs tax issue has been resolved, sparking fears that it could be the next jurisdiction struck off the Qrops list.
Currently in Gibraltar, pension income for people over 60 is taxed at 0 per cent.
The Association of Pension Fund Administrators in Gibraltar says HMRC is reviewing whether income taxed at 0 per cent can still be classified as “subject to taxation”.
One of HMRC’s conditions for qualified recognised overseas pension schemes concerns the extent to which benefits that the scheme pays to members are “subject to taxation”.
The APFA argues that 0 per cent tax should be classed as “subject to taxation.”
APFA chairman David Erhardt says: “We are very confident that we are going to win but, as trustees, we have made the decision that it is not fair to put any clients at risk of a possible unauthorised pension charge.
“We are still processing applications but we are holding off the final transfer of cash until this is resolved.”
Erhardt says it will be at least two months before HMRC provides an update.
If an individual transfers funds to an unauthorised Qrops, HMRC can charge up to 55 per cent of the transfer value as a penalty.
London & Colonial says it is confident that Gibraltar will retain its Qrops status but says it has has stockpiled Qrops transfers from clients and is white labelling a Guernsey Qrops and considering other EU jurisdictions in case Gibraltar loses this status.
HMRC says it has an ongoing duty to review whether the tax relief condition is met by any Qrops jurisdiction, including Gibraltar.
Global Qrops director Paul Davies says: “Advisers looking at Gibraltar for Qrops should hang fire until the Revenue has a ruling on this.”