Gibraltar QROPS transfers frozen, reveals QROPS Adviser
Pension transfers to Gibraltar QROPS are suspended until the end of September while HM Revenue and Customs and pension providers on the Rock sort out a long-running disagreement over tax.
(PRWeb UK) 16 September 2009 -- UK expats have had pension transfers to Gibraltar suspended in a row between the taxman and Gibraltar pension providers over income tax, reveals a leading offshore finance expert, QROPS Adviser.
Gibraltar's Association of Pension Fund Administrators has confirmed no transfers from UK pension funds to special overseas pensions for expats called QROPS will take place until the HM Revenue and Customs and the QROPS providers in Gibraltar come to an agreement.
APFA said the argument is over a 0% income tax charge on pension income for the over 60s.
HMRC says that pension income from QROPS schemes must be taxed and that 0% rate is not a tax.
APFA argues that 0% is a tax - similar to zero rate VAT in the UK and 0% corporation tax on the Isle of Man.
HMRC has written to the APFA asking them to clarify the tax issue by September 30 or face possible removal from the list of countries allowed to take UK pension transfers. A response has already been sent by APFA asking for a meeting with HMRC and is awaiting a reply.
"HMRC wrote to us in April about this and we have been in a dialogue with them," said APFA chairman David Erhardt. "The deadline was the end of August, but we asked for an extension to September 30.
"Since the start of the month, all Gibraltar pension trustees are processing new QROPS applications from clients but will not transfer any money while there is a doubt over Gibraltar QROPS status.
"This is because we do not want to put clients in the position of facing possible tax penalties over unapproved transfers. APFA has consulted some leading UK pension lawyers who agree we are likely to win our case and we are expecting to retain our QROPS status."
Gibraltar QROPS providers are listed on the HMRC list of companies taking pension transfers published on September 4.
HMRC has refused to comment about Gibraltar QROPS transfers.
"Rumours have flown about for months about Gibraltar losing status as a QROPS jurisdiction," said Stuart Wilson, of QROPS Adviser. "The problem was HMRC refused to say what was going on and this could mean expats have not had the best advice about whether to transfer their funds to Gibraltar or not.
"Anyone considering a QROPS transfer should consider taking independent professional advice from a firm that continuously monitors QROPS schemes, jurisdictions and the latest QROPS events to avoid risking their hard-earned pension pots."
If an expat with UK pension rights transfers their pension fund to an unapproved overseas scheme, HMRC can charge up to 55% of the transfer value in tax and surcharges as a penalty.
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