By Sophie Baker
HMRC is wasting time and effort by continuing to deny Gibraltar as an acceptable Qualifying Recognised Overseas Pension Schemes (QROPS) jurisdiction, says London & Colonial.
The pension and investments specialist said the effort that HMRC is wasting on its delayed acceptance of the jurisdiction is to 'no useful purpose'.
"I have had dealings with HMRC in various capacities for over 40 years," commented Ken Wrench, chief executive at London & Colonial. "In the past I have always had helpful explanations and discussions that have assisted understanding of policy and practice. In turn we in the industry have generally been able to formulate our various products and practices to reflect, and in some cases anticipate, the intention of HMRC and the policymakers. It is very frustrating that on this matter HMRC will not meet with anybody or explain let alone discuss their objectives."
Gibraltar QROPS providers have been in contact with HMRC since the spring, and have raised issues regarding compliance with the UK's QROPS regulations - the disagreement now reportedly focuses on Gibraltar's policy of taxing residents on their pension income. However, London & Colonial said HMRC has failed to explain why this could have any consequence for the UK in general, or for the Treasury.
"One wonders if there is some hidden agenda. Whatever tax is or is not paid by Gibraltar residents will make no difference to the tax paid to HMRC by QROPS members who are UK resident. So why are HMRC being difficult and delaying their agreement to QROPS in Gibraltar? If it is simply their interpretation of the letter of the regulations then it is about time either that they agree that a favourable interpretation is acceptable or that the regulations were changed. Gibraltar is an ideal jurisdiction for QROPS - it is within the EU, it is very well regulated, the currency is Sterling, the language is English and the common law legal system is similar to the UK," added Wrench.
He said HMRC's assertion that the tax basis for residents in Gibraltar is inconsistent with the QROPS regulations because it not part of a progressive tax system. "If they intend to maintain that assertion they really should state their authority for such an interpretation - our legal advisers do not believe that such an authority exists. Meanwhile, business is being held up and prospective scheme members are being denied the options and benefits to which we believe they are entitled - and for no good reason," Wrench concluded.