A move to ban pension transfers to offshore schemes by any company not regulated by the Financial Conduct Authority could be the simplest solution facing HM Revenue and Customs after its humiliating climb-down over Singaporean scheme Rosiip.
Earlier this week, FTAdviser revealed HMRC has been asked by a judge to produce a policy statement 21 days from Friday 21 June reviewing how it selects and handles qualifying recognised overseas pension schemes.
Previously, HMRC warned Rosiip investors that although it was once considered a Qrops, the scheme no longer qualified and pensions therein would therefore be subject to a 55 per cent tax.
Law firm Dorsey and Whitney launched a legal challenge which was then taken up by Hage Aaronson, which subsequently received permission to proceed with what became a successful group litigation order.
Now, commentators speculate upon how strongly HMRC could come down on Qrops policy.
Sam Instone, chief executive officer of wealth manager AES International, said: “There is already speculation that they are going to have to bring some type of clarity to the market and this has already been a huge potential mis-selling scandal in the future.
“There is a very simple possible solution which could be brought in overnight which would be common sense, which would be to only allow UK pensions to be transferred by UK regulated firms regardless of the destination.”
He said the market is currently dominated by companies in the Seychelles, British Virgin Islands and other offshore jurisdictions transferring UK pensions money overseas with no UK regulation, no systems and controls and no professional indemnity insurance.
Mr Instone said: “It’s so self-evident it’s mind-boggling that no one has done it over the last 10 years.”
Geraint Davies, managing director of Qrops specialist Monfort International, had previously said HMRC might go as far as suspending all overseas transfers.
However David Howell, chief executive of Guardian Wealth Management, warned that such a policy would be almost impossible to police.
He said: “The problem you have got is you have got other IFAs elsewhere in the world regulated in other jurisdictions. I don’t know how they could police it if you get Qrops providers going through Hong Kong or Singapore.
“Without knowing more about what they are trying to achieve I don’t see it working.”
Mr Instone added that although he believes it would be an elegant solution, he doubts HMRC would go as far as an outright ban: “It’s probably over-ambitious and [the statement] probably will not say too much. It will be another six years before they wake up, and there will be another big mis-selling scandal.”