Qualifying Recognised Overseas Pension Scheme investors are taking their fight to stop the tax man seizing more than half their pension pots to the High Court.
The 37 retirement savers have joined together in a group action as a last-ditch effort to stop HM Revenue and Customs seizing their cash and will argue their case before the High Court on June 17.
Along with nearly 100 other investors, they transferred their British pensions in to a Singapore ROSIIP QROPS in the 2007-08 tax year.
Unbeknown to them, the pension had wrongly self-certified that the scheme qualified for QROPS status in 2006.
In 2008, HMRC excluded the scheme – and one of the consequences of exclusion is any transfer of funds from a British pension is classed as a chargeable tax event by way of an unauthorised pension withdrawal.
Under pension rules, an unauthorised withdrawal is subject to a minimum 55% tax charge, and this can rise to 75% if other fines, interest and penalties are involved.
This effectively wipes out much of an investor’s pension savings.
HMRC has issued tax assessments demanding payment of the tax charge from many of the investors.
The investors intend to argue in court that because HMRC listed the Singapore QROPS as suitable to accept pension transfers from the UK, that they acted in good faith when investing their retirement funds and should not be penalised.
HMRC takes the stance that the QROPS self-certified meeting QROPS rules and was never a qualifying scheme, so should not have volunteered for inclusion on the list.
ROSIIP was never a QROPS
The tax man will contend that inclusion on the list is not equivalent to approval of a QROPS and that investors should carry out due diligence before committing their cash.
The ROSIIP provider contested this in an earlier case which was rejected by the Court of Appeal that agreed with HMRC’s opinion that the ROSIIP never qualified as a QROPS.
Lawyer Robert Waterson, acting for the investors, said: “We are readying for the trial. HMRC says transferring a pension to a scheme that is not a QROPS is a chargeable tax event. The tax man has treated this group’s action as such and issued them with an assessment, which is really a tax demand.”
The lawyers will argue that HMRC did not follow the correct procedure and the tax demanded is not due.