Equity Trust (Singapore), one of the trustees of the Singapore based pension fund Panthera ROSIIP which was formerly a QROPS has won the right to challenge HMRC in the UK courts.
The Panthera ROSIIP pension fund was formerly granted status as a Qualifying Recognised Overseas Pension Scheme, which meant that it was authorised by Her Majesty’s Revenue and Customs to receive UK pension assets free from UK income tax.
However, following an investigation into the way in which the Singaporean scheme was run, it was stripped of its QROPS status. It was widely reported that HMRC were concerned that the scheme was permitting unauthorised asset classes and allowing investors assets to larger cash lump sums that the QROPS system was designed for.
Under the QROPS rules, an authorised foreign pension scheme must be regulated and taxed as a pension in its own jurisdiction. Those requirements do not have to be carried out in the same manner that the UK system treats its own pension schemes, so investors have a wide range of different jurisdictions to choose from among the 1,000 or so QROPS that are on the HMRC’s permitted list.
Choosing a scheme that has not been authorised by HMRC, or continuing to have assets invested in an unauthorised scheme means that the investor risks facing a penalty tax bill at a rate of up to 55%.
HMRC struck the Singaporean QROPS off their list some time ago, and Panthera have been keen to get themselves restored to it.
However, HMRC are reported to have been less than keen to listen to their protestations. The current ruling was under a pre-action protocol in the English courts, where HMRC tried to strike out Panthera’s challenge to their ban on acting as a QROPS.
Now that the High Court has ruled that Panthera’s case can be heard, the fight between Equity Trust (Singapore) and HMRC can well and truly start.
