HM Revenue & Customs delists hundreds of Guernsey QROPS

April 13th, 2012 by Guernsey Finance

In HMRC’s republished list of QROPS, the number of approved Guernsey schemes has fallen from more than 300 on 5 April 2012 to only three on 12 April 2012.

Not only have the schemes of major providers servicing non-residents been delisted but so have those of local employers including the States of Guernsey scheme for public employees. Yet, the numbers of listed schemes in many other jurisdictions remains largely unchanged.

Fiona Le Poidevin, Guernsey Finance Deputy Chief Executive (click image to expand - image courtesy of Guernsey Finance)

Fiona Le Poidevin, Deputy Chief Executive of Guernsey Finance, the promotional agency for the Island’s finance industry, said “HMRC had given us an indication that only Guernsey pension schemes for Guernsey residents would remain on their list of QROPS published yesterday.

“By implication this meant that they were going to delist Guernsey pension schemes for non-residents. This raised the question as to whether it was just Guernsey being targeted or whether it was going to impact other jurisdictions and in particular, those offering third-country QROPS.”

“What we have determined from the publication of the new list is that, in broad terms, it is Guernsey which has been singled out by HMRC.”

“However, it is difficult to work out precisely why this is the case. HMRC’s amendments to its legislation contained in the UK Budget were clearly focused on targeting abuses in the system and Guernsey has always upheld itself as a model of compliance with the QROPS regulations.”

“The other major change within the new regulations was that schemes must treat residents and non-residents alike in respect of tax treatment and Guernsey took quick and decisive steps to introduce a new category of pension scheme, known as s157E, which, by extending the tax exemption on pension benefits to Guernsey residents, was designed to meet the revised criteria for a QROPS.”

“Therefore, it is confusing and frustrating that HMRC has now delisted almost all Guernsey schemes while most of those from other jurisdictions remain listed as QROPS. We accept that HMRC has the right to make its own rules regarding the treatment of UK tax relieved schemes but it needs to be an open and fair process. However, the current actions have been introduced without warning, lack transparency and appear discriminatory.

Indeed, HMRC seems to have set aside its own rules to meet an unpublished policy objective.

“The whole situation is made even more puzzling by the fact that HMRC’s original consultation document admitted that the changes would have a ‘negligible impact on receipts’ to the UK exchequer. In fact, we believe that if this situation is not rectified quickly and Guernsey schemes are not listed as QROPS then we could see business moving to more remote jurisdictions and with that, the monies from QROPS in the Island which currently flow back into the City of London may also be lost, which surely cannot be what HMRC is intending.

“If this situation is not resolved then it could potentially have an impact on around 200 jobs in Guernsey but it must be emphasised that existing members are fully protected and existing schemes will need to continue to be serviced.”

“In addition, Guernsey has always proved very adaptable in the past and so we would be hopeful that any job losses would be limited by the demand for skilled labour in traditional fiduciary businesses, the funds, insurance and banking sectors or other new and emerging areas of the finance industry.

“Of course, it should not be forgotten that HMRC has not just delisted Guernsey pension schemes for non-residents but it has also delisted many which are for Guernsey residents only.”

“I think that there is an element of confusion here due to the fact that most schemes with Guernsey residents only may not actually have that specified within the scheme any more than UK schemes would do so. No doubt this will be corrected in the very near future by HMRC but the fact that the States of Guernsey scheme for public employees has been delisted serves as an illustration as to the extent to which this is an unjust attack on Guernsey.”

 

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