Three days after the proposed changes were unexpectedly included in the UK’s draft Finance Bill 2012, the chairman of the Guernsey Association of Pension Providers, Stephen Ainsworth, said he was “confident that Guernsey will remain at the forefront of international pension provision”, citing the “full commitment” of the States of Guernsey’s Income Tax Office and senior Government policy makers “to consider ways to resolve any potential issues that may be contained in the draft legislation”.
For years many in the QROPS industry have speculated that the UK Government at some point might move to tighten up certain aspects of the regulations that permit UK taxpayers who are moving abroad to transfer their pensions out of Britain, but few foresaw changes of this type or magnitude.
‘Never criticised’
GAPP, which was founded in 1990 and currently has some 53 Guernsey-registered corporate members, noted in its statement that Guernsey had never been criticised by HM Revenue & Customs “on any QROPS matter”.
The association added that it believed that the proposed changes to the QROPS legislation, unveiled on Tuesday, were “never aimed at Guernsey”, without saying which, if any, other jurisdiction the changes might have targeted.
“Guernsey is the world leading jurisdiction for QROPS business and the jurisdiction, its policy makers and industry, are determined to maintain that position by offering well regulated, compliant and prudent QROPS product, now and in the future,” added Roger Berry, chairman of the QROPS sub-committee of GAPP.
As reported, the proposed changes are due to take effect on 6 April 2012, and, as currently proposed, would include a requirement that QROPS offer scheme members exactly the same tax regime as would be available to residents in the country in which the QROPS is domiciled. According to some experts, this could cause significant problems for some jurisdictions, including Guernsey, where this tax parity is not now the case.
“Unless Guernsey can successfully lobby against the changes, or change their internal tax rules, there could be problems,” Paul Davies of Global QROPS told IA on Wednesday.
QROPS providers and other pension industry figures have insisted they will vigorously lobby Britain’s tax authorities to ensure that any changes made would not affect the ability of UK taxpayers to transfer their UK pensions to properly established, well-managed overseas schemes.
‘Bedrock’ relationship
Peter Niven, chief executive of Guernsey Finance, the promotional agency for the Guernsey’s financial services industry, also expressed confidence that the island’s pension providers would be spared by the final draft of the legislation, since they did not engage in such abuses of the current legislation as when “clients leave the UK and access 100% of their pension pot as one lump sum”.
“Indeed, the introduction of QROPS in Guernsey was the result of long and detailed discussions between our tax officials and HMRC,” Niven added. “This enabled HMRC to agree our QROPS product with the fullest knowledge of the island’s pension and tax regimes.
“Since the introduction of the current overseas pension arrangements in April 2006, our relationship with HMRC has provided the bedrock for the development of our QROPS industry, to the extent that Guernsey is now recognised as the jurisdiction of choice for these products.
“Our commitment to being the market leader is illustrated by the fact that earlier this year the GAPP introduced a voluntary code of practice for local QROPS providers.”
Noting that the timescale for consultation on the proposed legislative changes was not long, Niven said plans for detailed discussions between the industry and Guernsey’s tax office were already in place.
“Our next steps will become clearer once those discussions have taken place and as we move into the new year.”
As reported, the Isle of Man and its pension association said they welcomed the draft legislation, with Stuart Clifford, chairman of the Isle of Man Association of Pension Scheme Providers, saying that the draft regulations would help to “combat…abusive schemes which have previously been offered by some countries”.
