Our Insights

By Federico M.A. Cincotta

In 2012 HMRC issued a series of assessments against pension fund holders who had transferred their pensions in 2007-8 from UK pension funds to a Singapore based fund, ROSIIP. The assessments were for 55% of the pension savings transferred on the basis that the transfers were not to an authorised fund. ROSIIP had at the time been accepted by HMRC as an authorised fund (a QROPS) and listed as such on HMRC’s website. HMRC maintained that it had nevertheless never been a QROPS and statements by HMRC to the contrary effect could not be relied upon. At around the same time HMRC had exonerated from assessment investors in another similarly placed scheme, the Beazley scheme, even though on that occasion HMRC suspected the investors of tax avoidance motives, while no such suspicion was raised against the ROSIIP investors. We ran the challenge to these assessments under a GLO.

On the last day of the hearing of the ROSIIP GLO HMRC withdrew all the assessments to tax and undertook to issue guidance on how it would treat transfers to overseas pension funds.

That guidance has now been issued although confusingly referring to the ROSIIP GLO as “R (Gibson) v Commissioner for HM Revenue and Customs”, one of the test cases, rather than its official title.

HMRC will not raise assessments from transfers from a registered pension scheme to an overseas scheme provided that 1) the transfer took place before 24 September 2008; and 2) the scheme was included on the list as a QROPS when the transfer took place (or at a time reasonably proximate to the transfer). This is subject to an obvious proviso in case of dishonesty, abuse, artificiality, etc.

The date of the 24 September 2008 represents when HMRC assert a caveat was placed on its website alerting readers that they could not rely on the inclusion of a fund on HMRC’s QROPS list as evidence that it was in fact a QROPS. For transfers made after that date to funds appearing on the QROPS list HMRC indicate that HMRC will consider whether to issue assessments “in the light of the principle of conspicuous unfairness”. No further explanation is given as to whether that should mean that a transfer made in good faith in reliance on the entry of the recipient fund on the QROPS list would not be assessed to tax. In the ROSIIP litigation it was contended that the proper statutory construction of the provisions meant that the entry of a fund on the list amounted to an assessment that it was a QROPS irrespective of any such caveat and that were that not the case the provisions would offend legal certainty. With the withdrawal of the assessments no judgment will be delivered on that point.

This article appears in the JHA December 2013 Tax Newsletter, which also features:

1. Autumn Statement
2. The M&S Case followed again: C-322/11 K by Amita Chohan

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