Singapore-based qualifying recognised overseas pension scheme (QROPS Singapore) trustee Equity Trust has lost its latest hearing in a high court, leaving investors open to a potential 50% tax charge. Ouch!
QROPS Singapore based group Panthera have lost their 3 year legal battle which began when Equity Trust’s Panthera recognised overseas self invested international pension (ROSIIP), a type of QROPS, was thrown off the list of recognised schemes along with all other Singapore vehicles.
The Inland Revenue pointed out back then that the schemes did not meet condition B of its QROPS requirements, which says schemes must be registered with the tax authorities in the jurisdiction in where they based. The QROPS Singapore schemes did not fulfill this necessary requirement.
Equity Trust contested HMRC’s decision that QROPS Singapore schemes were unlawful three years ago in 2008.
The Inland revenue was concerned Singapore QROPS were no more than “pension busting” vehicles in order to cash in their pension pots to access a 100% lump sum and some IFA’s were actively promoting such options.
HMRC were worried investors were withdrawing large cash sums out of Singapore QROPS after the 5 year tax reporting rules were up, rather than using their money to provide a steady income for retirement.
In the latest hearing, Judge Howe QC ruled the Panthera scheme was not properly registered or even recognised by the Singapore revenue.
Howe said the scheme was effectively closed to Singapore residents, contrary to Equity Trust’s claims. Therefore, it received the tax breaks of a foreign trust from the Singapore revenue, and not those of a pension scheme.
QROPS Singapore. Equity Trust to Appeal
Equity Trust has permission to appeal.
The decision means investors who have been using the ROSIIP may find they may have a 50% charge imposed on the money they have transferred if a further appeal from Equity Trust fails.
Bethell Coddrington, managing director of Equity Trust, said the trustee firm is “not happy” and is considering an appeal. But, it looks like the nail in the coffin for QROPS Singapore
David Howell, chief executive of Guardian Wealth Management, added: “This case is a timely reminder of the increased scrutiny the QROPS market is receiving from revenue and regulatory bodies.
“The proper pension transfer process should be undertaken, where the individual is fully advised on not just the benefits of QROPS but where they may not be suitable, such as if the retiree, or their spouse if benefiting from the QROPS, decides to return to live in the UK.
“The consequence of going into the wrong scheme could see pensioners faced with a tax charge of 50% of their retirement funds in the scheme, as well as possibly being impacted by surcharges levied on the scheme itself.”
QROPS Singapore. What other options are avilable?
This is a warning to other jurisdictions such as New Zealand who have also been allowing 100% cash in on their qrops transfers. The door has now been firmly shut on QROPS Singapore. However, long running QROPS schemes in Guernesy and Isle of Man are still fantastic vehicles for mitigating tax in the UK.
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QROPS Singapore article written by QROPS Specialists.QROPS Singapore Gets Slammed! by Richard Malpass