In a statement posted on the Guernsey government’s website, Guernsey director of income tax Rob Gray said that the QROPS in question were “those purely domestic Guernsey schemes” that had been caught up by HMRC’s recent effort to crack down on what Revenue officials are said to believe is the mis-use for tax evasion and avoidance purposes of qualifying recognised overseas pension schemes by some firms and advisers. The statement confirms rumours last week that Guernsey and HMRC were close to an agreement on the domestic schemes.
The statement does not say how many schemes fall into the "purely domestic Guernsey schemes" cateogory.
As reported, some 310 out of 313 schemes were removed when HMRC published its updated list of QROPS on 12 April, following its announcement last December that it planned to tighten up on the legislation under which it permits UK pensions to be transferred abroad.
Most of these are thought to be schemes that accommodated the UK pensions of individuals who moved from Britain to other countries, and which are therefore unlikely to be affected by HMRC’s latest announcement.
According to the Guernsey statement, HMRC now says that if a "Section 150 scheme [an employer sponsored scheme] is able to confirm to HMRC that the purpose of the scheme is to provide benefits for employees of the relevant employer, and the relevant employer only employs people in Guernsey – the consequence of which is that all pensions arising will be taxable in Guernsey, irrespective of where the recipient may live when the pension is paid – the scheme’s QROPS status will be reinstated".
Public sector schemes to be relisted
Among the schemes that will now be relisted as QROP schemes will be those containing the pensions of States of Guernsey public sector employees, the delisting of which had been particularly controversial.
Gray said he was “delighted that HMRC has recognised and accepted the arguments that we have made”, and noted that the clarifications, “which widen the approach originally taken by HMRC, should enable Guernsey schemes that were only ever set up for Guernsey based employees to continue to be QROPS”.
He added: “We understand that HMRC has written to all Guernsey pension schemes asking them to advise HMRC if they feel the pension scheme still meets the conditions to be a QROPS.”
The statement notes that talks are continuing with HMRC concerning Guernsey schemes that have members resident in the other two Crown Dependencies – that is, the Isle of Man and Jersey – “as well as other aspects of QROPS”.
The Guernsey Association of Pension Providers said it welcomed the news that HMRC was willing to consider reinstating some of its members’ delisted schemes, and expressed gratitude for the efforts of Gray “and his senior team” on the industry’s behalf.
“We welcome this modest relaxation for Guernsey domestic schemes, though remain concerned that the restrictions which remain are greater than those which apply in other territories,” GAPP president Stephen Ainsworth said.
He added that the association continued not to regard HMRC’s approach as “proportionate or in line with HMRC’s stated policy objectives” and that it would continue to “seek to engage with HMRC on this and other issues in the very near future”.
Roger Berry, Chairman of the QROPS Sub Committee of GAPP, added: “GAPP has entered into a dialogue with HMRC in order to seek some resolution and understanding of HMRC’s position following very specific targeted legislation which is not applicable to other QROPS jurisdictions."
Berry added that HMRC’s motivation did not appear to be driven by a desire to boost the government’s tax coffers, noting that "HMRC’s own exchequer impact assessment states the measures are expected to have a negligible effect on receipts".
Gray stepping back
Until now, Gray has been acting as the unofficial conduit between Guernsey pension administrators whose QROPS have been delisted but who believe they have a case to be reinstated and the Revenue. From now on though, he says, they should resume corresponding directly with HMRC themselves.
