HMRC demands more tax from Singapore QROPS


Another batch of disappointed Singapore QROPS investors have received letters from HM Revenue and Customs (HMRC) demanding 55% of their pension pot transferred in to an illegal scheme as a tax penalty.

The demand is for investors to pay an unauthorised payment charge for joining a Qualifying Recognised Overseas Pension Scheme (QROPS) which was later stripped of its status.

The charge being demanded is made up of a 40% tax bill and 15% surcharge against the pension transfer value.

This is the latest instalment in a long-running battle between investors who put their money into the Panthera-run Recognised Overseas Self Invested International Pensions Retirement Trust (Singapore) (ROSIIP) and the taxman.

The ROSIIP lost QROPS standing in 2008 when HMRC said that the scheme failed to meet QROPS requirements when registered.

Legal battle

However, the timing of HMRC’s decision meant that those who joined ROSIIP before the change of status were unaware of an issue and are now facing the penalty.

There are now around 120 ROSIIP investors who are part of a group litigation order fighting HMRC’s decision.

The group’s lawyer, Robert Waterson, says that number has been swollen recently after another batch of letters was issued by HMRC.

Since the decision was made, ROSIIP trustee TMF Trustees – formerly Equity Trust – have been locked in a legal fight to determine whether HMRC was correct to remove their QROPS status but have lost each round before the courts

In 2012, the High Court in London granted a group litigation order to ROSIIP investors which effectively allows the court to hear all of their claims as one single claim.

That process led to HMRC having to publish a case summary on their website giving details of the judicial review and explained the process involved.

QROPS list argument

In that statement, HMRC makes clear that UK pensions can be transferred free of UK tax when they are made to a QROPS and that ROSIIP told them in 2006 that they met the necessary conditions.

Their details were subsequently added to the HMRC website with other QROPS schemes.

However, the High Court found in 2011 that ROSIIP was never a QROPS and this decision was upheld by the Court of Appeal a year later.

Investors say that because ROSIIP appeared on the HMRC published list there was a legitimate expectation that the investment would not attract tax liabilities.

Their case will be heard in full in the High Court this the summer.