Guernsey Qrops provider Concept Group says HM Revenue & Customs is singling out the jurisdiction after it published a rule that led to over 300 of the island’s Qrops being cut from its list of registered schemes.
In April, Guernsey lawmakers introduced new rules to address HMRC concerns that Qrops treated residents and non-residents differently for tax purposes. The new regime, known as S157E, has no tax charges on contributions, growth or benefits for residents or non-residents.
In March, HMRC published rules for Qrops that came into force on April 6 and, despite the Guernsey changes, later removed 309 of the island’s Qrops from its list of registered schemes.
A recent HMRC amendment to the new Qrops rules, set to come into force on May 25, says the S157E schemes “must not be open to non-residents of Guernsey” to be considered a Qrops.
An explanatory note to the amendment says a lack of relief on contributions and a 20 per cent tax charge for residents transferring into S157Es means they are, in practice, a vehicle for non-residents and “would encourage transfers from UK schemes primarily for tax reasons”.
Concept Group managing director Roger Berry is a member of the Guernsey Association of Pension Providers and chairs its sub-committee on Qrops. He says: “The legislation was designed to be in line with the rules HMRC brought in. This amendment specifically targets this legislation within this one jurisdiction.”
Worldwide Financial Planning IFA Nick McBreen says: “Guernsey was pushing the envelope with its legislation so it is no surprise this has happened.”