HMRC clamps down on Hong Kong Qrops scheme
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Expat UK investors who had their pensions transferred into a tax scheme in Hong Kong could lose 55 per cent of their savings after HMRC struck the scheme off its approved list.
HMRC has revoked the status of the Beazley Consulting Pension Scheme - owned by expats all over the world - saying it does not meet its criteria for Qualifying Recognised Overseas Pension Scheme status.
The savers face a 40 per cent unauthorised payment charge and 15 per cent surcharge on the value of the transfer.
HMRC is understood to have offered to waive the 15 per cent surcharge if investors can show that they genuinely believed they were investing in an eligible Qrops scheme. It will also “view sympathetically”requests not to collect the 40 per cent unathorised payment charge, according to the law firm acting on behalf of the scheme.
In a statement, law firm DLA Piper, which has been brought in to act on behalf of Beazley, says: “The Beazley Consulting Pension Scheme was set up in 2007. At the time Hong Kong lawyers advised that the scheme met HMRC’s criteria to qualify as a Qualifying Recognised Overseas Pension Scheme in the UK. Appropriate legal advice was taken in Hong Kong before Beazley Consulting submitted its application to HMRC and HMRC accepted that the scheme met its relevant criteria.
“Some 18 months later, after taking its own advice, HMRC decided that the regulations to which the scheme was subject did not meet its criteria and that the scheme no longer qualified as a Qrops. This decision also affected other similar schemes. Since then Beazley Consulting has been working closely with HMRC to resolve the issue and has advised members of the best way forward.”
HMRC refused to comment on a specific scheme.
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Readers' comments (5)
Serval | 7 Sep 2010 1:47 pm
If HMRC misinterpreted its own criteria by wrongly approving the scheme, how could it now put the onus on individuals to demonstrate why they thought it met their criteria? This is utter lunacy is it not?
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Jerry | 7 Sep 2010 2:11 pm
So HMRC can make its own error in granting approval, can then change their mind and its the investors who pay!
Rather than 'viewing sympathetically' investors plight why not spend the time to review why they got it wrong in the first place. Also who should pay, internally, not the poor investors!
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David Trenner - Intelligent Pensions | 7 Sep 2010 2:26 pm
The problem with most QROPS is that they are sold by non FSA registered advisers. Some of them may be okay, but every time a dodgy one bites the dust (Singapore, Hong Kong etc etc) there are going to be clients who suffer.
I think the lesson is clear: if you must do a QROPS use a UK based specialist adviser, but better still leave your money in the UK scheme!
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Henry | 7 Sep 2010 5:45 pm
What utter tosh by David Trenner . There are clearly some UK based IFAs who don't have adequate experience of QROPS transactions while there are also some who do and there are IFAs in some offshore jurisdictions who often have a much better understanding and undoubtedly some who don't. Clearly David has no understanding at all if he thinks that all non-residents should suffer the unneccessary structures of all too often unsuitable UK schemes. The problems with many QROPS has been the subsequent failure of the schemes to comply with the relevant spirit of co-operation rather than the fault of HMRC or IFAs. However mis-selling by UK and offshore IFAs has undoubtedly also been a contributory factor in some instances. Perhaps the complexities surrounding QROPS are too great for people such as David Trenner to understand and a new regulatory framework specifically for onshore and international QROPS advisors needs to be established? I think that the lesson is clear - take advice from someone who knows about QROPS!
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B Codrington | 14 Sep 2010 11:49 am
The following comments from HMRC might explain that they never have officially approved any QROPS
“I should start by pointing out that this Office does not have a role to approve schemes for QROPS status. The UK tax law does not provide any mechanism for such approval. Rather, the status of a scheme is considered to be a matter of fact in the context of the tax rules” (HMRC 26/02/10)
"The legislative regime does not provide for HMRC to certify, or to reach some other free-standing and binding decision, that a particular scheme is a QROPS. In particular, there is no provision in the legislative regime pursuant to which the manager of a putative QROPS may request or demand such a binding decision from HMRC".(HMRC 21/7/10)
Perhaps if Beazley Fiduciaries thought that they had a strong case, they would pursue this through the UK Courts. A lot of talk about HK legal advice, but bearing in mind this is a UK issue, what UK advice was taken?
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