Guernsey Cracks Down On Pension Schemes Misuse

by Phillip Morton, Investors Offshore.com

18 November 2008

The Guernsey Income Tax Authority has introduced further legislation following bad publicity in the local and national media over the last few months regarding perceived misuse of overseas pension schemes.

The schemes in question are those with Qualifying Recognised Overseas Pension Scheme Status (commonly known as QROPS), used for receiving transfers from UK pension schemes.

There have been indications that the UK authorities have concerns regarding Guernsey based schemes. The States of Guernsey Treasury and Resources Department therefore instructed the Administrator of Income Tax to contact HM Revenue & Customs in order to identify their concerns and establish how they could be allayed.

Guernsey has said talks between the two departments have been "most constructive" and that they are "now acting to maintain Guernsey’s good international reputation in the area".

Additional conditions are now being imposed on the approval of any scheme which can admit members who are not resident in Guernsey. It is hoped that these new conditions will prevent non-residents transferring money from the UK and then collapsing the fund, avoiding tax on the proceeds.

Conditions are also being imposed on transfers from Guernsey approved pension schemes with QROPS status.

“There should be no ability to take 100% of the fund as a lump sum,” said Administrator Rob Gray.

“These conditions do impose further restrictions on the use of Guernsey schemes for non-residents, but they continue to demonstrate that Guernsey is committed to ensuring that pension schemes are used for the purpose for which they are established – to provide a pension for individuals in retirement".

Recommended