UK expats win over HMRC in delisted QROPS case

Published:  13 Sep at 6 PM
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UK expats with delisted QROPS have finally triumphed over the British taxman after a surprising court verdict.

Recently in the First Tier Tribunal court, four appeals against HMRC were allowed due to the late serving of discovery assessments on delisted QROPs. Ina Hills, Nicolo Martin, Gary Connell and Gerrard Gordon had all transferred their pension pots to the Latvia-based Wenn International Pension Scheme at the time its QROPs was listed with HMRC in 2009. Subsequently in 2010, HMRC de-listed the scheme due to its failure to pass qualifying tests. The delisting caused the four’s investments to be transferred back to them, thus allowing HMRC to designate the amounts as unauthorised pension payments liable to massive tax charges. In addition, another 11 investors had also transferred their pensions to the scheme.

As late as 2014, HMRC sent out its discovery assessments, causing the four affected pensioners to appeal against the assessments, citing ‘out of time’ as the reason.
Fortunately, the appeals judge agreed the demands were out of time, saying during her summing up that HMRC had failed to issue the demands within the legal time frame. She added that, even should the discovery been made later, two years’ delay in issuance would also have been out of time.

In a similar case, a legal challenge by a SIPP provider went against HMRC, but the taxman is refusing to admit defeat due to the huge amount of tax relief involved and is appealing against the decision. The case against provider SIPPChoice rests on HMRC’s argument that assets transferred into both QROPS and SIPPs were not listed at their true value in order to void taxes.

The taxman had banned pension providers from valuing shares, property and other such assets for transfer into the two products, and claimed many cases where the true value of assets had been overstated in a ruse to claim back tax relief. Again, the First Tier court threw out HMRC’s ruling but allowed an appeal against its decision. As a result, providers of QROPS and SIPPs are now not accepting assets as such, telling retirement savers to sell them and contribute the resulting cash to the scheme.
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