Guernsey pension providers have hit out after HM Revenue & Customs dropped 309 Qrops from the jurisdiction from its approved provider list.
Last week, HMRC published its first list of approved Qrops providers following a Budget clampdown on the schemes. The list shows the number of Guernsey-based Qrops providers has fallen from 312 last month to just three this month.
HMRC’s final Qrops rules, which came into force on April 6, require providers to treat non-residents and residents of a jurisdiction in the same way for tax purposes.
An HMRC spokesman says: “We do not have a specific comment on why a number of Guernsey-based Qrops have been removed but we only remove a Qrops where either they cease to exist or they no longer comply with the rules.”
Guernsey had hoped it could continue to offer pensions to non-residents after it introduced 157E legislation designed to meet the new requirements.
HMRC declined to comment on Guernsey’s 157E legislation.
Guernsey Association of Pension Providers president Stephen Ainsworth says: “It is frustrating that HMRC, having set out its detailed rules, then seeks to set them aside without notice. This change, if confirmed, will leave many UK expatriates without the opportunity to move their pension savings to a secure jurisdiction of their choice.”
A spokesman for Qrops provider Brooklands Pensions says: “HMRC appears to have decided to immediately disqualify schemes approved under section 157E. This is obviously extremely disappointing for us and concerning news for all Guernsey Qrops members. We will be working hard to establish what action should be taken to fully protect our members.”
Elsewhere, the number of schemes available in Jersey fell from 138 to 64. The number of Isle of Man-registered Qrops fell from 185 to 173, while the schemes registered in New Zealand fell from 64 to 23.
The total number of pensions schemes recognised as Qrops by HMRC fell from 2,980 to 2,651 due to a number of new schemes being added to the list.
Worldwide Financial Planning IFA Nick McBreen says: “After the euphoria of rolling these things out, it seems the proposition is not as compelling as people thought. Qrops are still not properly understood and perhaps they are not the best option, so people still need to be careful about using them.”
Qrops web comments
HMRC has clamped down on Guernsey because of those providers who have misused the s157A legislation. Their actions have affected others who operated within HMRC regulations. No doubt, HMRC was not impressed with GAPP’s attempt to get round its regulations with the s157E scenario. The EU directive gave freedom of membership to residents of any member state and HMRC applied that criterion globally for schemes which met the rules. As Guernsey is not in the EU, GAPP has no foundation for complaint.
HMRC seems to be saying it can do anything it likes, often with retrospective effect. If someone chooses to leave the UK, common sense says they should be able to take their pension with them and just because you choose to live in a particular country, why should you transfer your pension there, rather than to a country with better regulation and security?
Of all the practices that go on in offshore finance centres, Qrops is probably the least contentious as it does not involve evasion of UK tax. Guernsey offers genuine pension schemes that are well regulated and follow HMRC’s own rules, so it is hard to see why it is being singled out. HMRC must be putting a lot manpower into this and does not expect to make any additional revenue. Surely, it would be better tackling genuine offshore tax evasion?