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When the HMRC clamped down on QROPS providers many individuals and institutions were badly affected. Now one group is fighting back in the courts.
Members of the Singapore based Panthera ROSIIP scheme are taking the HMRC to court to protest against the 55% rate they are being forced to pay on transfers previously thought to be untouchable by the taxman.
In 2008 the HMRC targeted QROPS providers by altering the guidelines and criteria governing their use. Whilst qualifying QROPS avoid tax, the Panthera ROSIP investors are liable to pay 40% plus a 15% penalty based on the value of the fund.
Robert Waterson, an associate at Dorsey & Whitney, the lead solicitors acting for the group, said: "Almost all of our clients are retired or soon to be retired expats whose plans for retirement, through no fault on their part, have been placed in serious jeopardy by HMRC's actions."
The case is based on a “legitimate expectation” that transfers to the QROPS scheme would not attract any unauthorised payment charges. Furthermore, the group is arguing the retrospective tax claim breaches European law.
The Panthera ROSIIP QROPS had been on HMRC’s list of qualifying funds for about 14 months before the tax regulator withdrew it. HMRC says the trustees of the fund made errors in foreign law on the application form when they originally applied.
The group claims however that by placing the ROSIIP fund on the list of qualifying funds and by leaving it on that list for 14 months, HMRC gave a legitimate expectation that it would not raise charges upon transfers into the fund.
Because the High Court has granted a group litigation order (GLO) to combine the judicial review applications issued by pension holders, the claimants will be able to share resources and costs in fighting the retrospective charges.