Mario Vitanelli is a freelance writer and blogger who specializes in international politics and finance, retirement and investment. His areas of expertise include European, Asian and Latin/South American economic policy and QROPS. When away from his keyboard, he enjoys photography and appreciates the rest of the Vitanelli family’s endless patience with his football dependence.
In 2011 Guernsey won the Professional Advisor International Fund and Product Award’s accolade for ‘Best QROPS Provider’. In 2012, however, HM Revenue and Customs (HMRC) eviscerated Guernsey’s Qualified Recognised Overseas Pension Scheme (QROPS) industry. They did so by removing more than 99% (310 from 313) of Guernsey’s QROPS from the HMRC list. Since introducing the program in 2006, has released an accompanying list of QROPS providers by nation. So if a QROPS apparent illegitimacy is signaled by its removal from the list, it would stand to reason that one’s legitimacy could be gauged by its inclusion on the list, right?
Unfortunately, that turns out not to be the case. Before any scheme-listing actually begins HMRC warns, “The list is not to be taken as a recommendation for a particular scheme or product. Nor should it be taken that any scheme featured on the list is approved or backed by HMRC.” It seems like a strange qualification, considering the power of de-listing and that the QROPS ‘R’, for ‘recognised’, suggests that QROPS on the HMRC’s list would be… well, recognised.
The Guernsey crackdown was both preceded and followed by hundreds of additional de-listings around the world. In virtually all of the de-listings, seemingly accepted schemes appeared on the list, until they suddenly didn’t. In one of the most infamous cases a number of investors got stung when the Singapore corporation Panthera’s Recognised Overseas Self Invested International Pensions Retirement Trust (ROSIIP) was abruptly dropped in 2008. In 2012 those investors stung back, suing HMRC for the additional, significant and unexpected tax bills resultant from the dropping of ROSIIP. (Their suit was unsuccessful.)
ROSIIP investors complained that the HMRC’s listing of the scheme was tacit endorsement. It’s a sentiment of which a number of critics have reasonably asked, ‘Why does HMRC bother printing a list composed of schemes that aren’t necessarily endorsed and can be dropped at any time; sometimes to the financial detriment of those invested?’
So far there are no clear answers forthcoming. I think virtually everyone would agree that HMRC’s charge to ferret out QROPS tax cheats is not only a noble one but something everyone can stand behind. However, if a system like QROPS is going to be allowed by the British government there should be a clear standard for governmental acceptability, a list featuring those schemes deemed acceptable and a grace period for transferring from a failing scheme and/or for the schemes administrators to reform their practices.