A landmark case came to a close earlier this week, proving in favour of a group of expatriates who won their appeal over penalties received on delisted Qualifying Registered Overseas Pension Schemes (QROPS). Signalling light for other expats in similar positions, the win provided support against HM Revenue & Customs (HMRC)’s delay in issuing unauthorised payment member tax charges assessments for expats who had invested in a Latvian-based pension scheme close to ten years ago.
 
The Wenns International Pension Scheme, originally given QROPS status in 2009, was delisted in 2010 after failing qualifying tests by HMRC who further claimed the scheme was “not a qualifying recognised overseas pension scheme”. The UK tax office subsequently deemed the pension transfers within the scheme as unauthorised to levy the payment charges against the four expatriate’s scheme values. HMRC’s decision to delist the scheme led to the four expat appellants to receive the full value of their Qrops as unauthorised pension payments.
 
HMRC claimed that owing to the Wenns scheme not passing a Qrops, transfers made way for unauthorised payments charges and surcharges on each of the appellants, under s208 and s209 of the Finance Act 2004.
 
The decision by First-tier Tribunal judge, Sarah Falk, supported the expat’s appeal against HMRC’s late discovery assessment as simply too long and “stale.” Falks further commented with her statement, “Were the discoveries stale? We think they were. A delay from mid-2011 to March or April 2014 is around three years, and we think that is too long for the discovery to retain its ‘essential newness.”
 
This emerging favour to expatriates and scheme members of such QROPS, no doubt signals an opportunity for those whose monies had been unscrupulously invested in schemes, falling significantly short of HMRC’s qualifying conditions, to also claim compensation for penalties received in ‘unauthorised’ payment charges.
 
“With QROPS often exploited by some unlawful advisors as products rather than actual solutions for overseas transfers, the courts are undoubtedly remedying the misfortune of scheme members that had previously caused devastating effect to their wealth and retirement planning”, comments Montfort advisor and pension transfer specialist, Alex Norwood.
 
Where individuals engage financial advisors to seek the very best advice on how to transfer their pension overseas, they are often unbeknown of the potential pension scams and loopholes that investing in a QROPS via an unethical advisor can bring.
 
“A lot of our work is often a clear-up act for individuals who have fallen victim to this and suffered as a result. We see this time and time again, whether a QROPS in the United States, Denmark, Australia or Canada, with the latter country previously relying on QROPS for any overseas pension scheme, for HMRC to later delist all Australian QROPS bar from one,” further details Alex Norwood
 
At Montfort, we pride ourselves on our technical analysis and research across all client cases to ensure the correct vehicles are used for any pension transfer. If the best solution is a QROPS, we will undertake a pension transfer that way, however, only with a scheme that has been developed with ethics and best practice to ensure best results for all scheme members. In this instance, we may go on to create our own QROPS or choose to go down the Self-Invested Personal Pension (SIPP) route – whatever may be in the best interest for the client to ensure their optimum financial wealth for now and in future years.
 
An advisor must always weigh up the cost vs. benefit with QROPS schemes often delivering a much higher cost, which therefore must be justified by the benefit it would provide to the client. Where there is little or no benefit, it should not be recommended.
 
 
Should you share the concerns of this QROPS and expatriate appeal case, contact Montfort to speak to one our leading financial advisors or pension transfer specialists, expert at providing cross-border solutions. Call +44 (0)1483 202072 or email info@montfort-intl.com; montfort-intl.com

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