No round up this week (as there's nothing much to round up.) One case that did catch my eye was the judicial review of the decision in Equity Trust Singapore Ltd v HMRC [2012] STC 998. (More commonly referred to as the ROSIIP case.)
HMRC pulled out of the case so it will not be reported but there's a good summary of what went on at
It's interesting as although the tax payer didn't win the case in a formal sense HMRC did withdraw its claim for the 55% tax on an unauthorised payment and it seems also to have met the taxpayers costs. So judicial review clearly did work in this instance.
I also think there is a wider point that the case brings out about the way that HMRC works. The QROPs list that HMRC publishes is in essence a very good idea. The legislation in this area is necessarily complicated so rather than individuals having to wade through it overseas schemes can provide details to HMRC who will include them on the QROPs list. If HMRC tested applications against the legislation it should secure tax revenue by isolating rogue advisers and simplify the position for tax payers. However, the QROPs list never has been properly maintained because HMRC do not actively vet the applications they receive. What has happened in this instance is that pension transfers have been made to pension schemes that were not QROPS but HMRC will not be able to collect the tax due. Additionally there have been three court cases (including the judicial review) that should have been avoided.
The current QROPs list includes a statement
"The purpose of this list is merely to help UK registered pension schemes carry out their due diligence when transferring pension savings to another pension scheme that is not a registered pension scheme.The list is not to be taken as a recommendation for a particular scheme or product. Nor should it be taken that any scheme featured on the list is approved or backed by HMRC."
But doesn't this means that there will be more legal disputes over QROPs. That is tax payers will transfer to a QROPs on the list. HMRC will attempt to apply a retrospective non - qualifying payments charge and the whole thing will end back in judicial review on the basis that HMRC can't use the small print to escape its responsibilities?
The problem lies in the fiction that you cam somehow separate HMRC's revenue raising function (where funds will be made available) from ongoing compliance where costs have to be cut. Getting things right from the start and ongoing compliance to identify problem areas is the only effective way of protecting tax revenues.
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