HMRC Humiliated Following Overseas Pension Judicial Review

HM Revenue and Customs have been left red-faced after conceding defeat to a personal pension scheme based in Singapore during a High Court judicial review.

HMRC chose to withdraw relevant assessments from the review and were required to pay the applicants’ costs on an indemnity basis. The proceedings have been publicised across the investment world, although the withdrawal means that a judgement is now unlikely to be issued.

The review came after a delisting of the Recognised Overseas Self Invested International Pension Retirement Trust (Singapore) (ROSIIP) by HMRC.

Established in Singapore in 2007, the ROSIIP personal pension scheme was included in HMRC’s list of Qualified Recognised Overseas Pension Scheme (or QROPS) in 2006, according to draft documents provided by ROSIIP’s trustee.

In 2008 however, HMRC reversed their decision and said that ROSIIP was not a QROPS, withdrawing it and delisting the scheme. Now, all funds that had been paid into ROSIIP were unauthorised transfers, which meant that tax charges up to 55 per cent (40 per cent charge plus a 15 per cent surcharge) would apply, along with other interest and penalties.

It was then ROSIIP members who applied for a High Court judicial review, claiming that the delisting of the scheme infringed:

  • EU law – it restricted the free movement of capital between an EU member state and a non-EU state;
  • The European Convention of Human Rights law – the circumstances of the assessments were such that the applicants could not have foreseen that they would subsequently be chargeable; and
  • English public law – the applicants had a legitimate expectation that HMRC would not retrospectively alter their tax treatment of ROSIIP.

In 2012, a group litigation order was made and permission to apply for a review was granted in May of this year. The fundamental application was heard by Charles J across four days in June, and it is believed that he was critical of HMRC, describing their behaviour as “shameful”. He is also thought to have taken them to task for failing to make a full disclosure.

Since then, the question remains as to whether HMRC’s conduct is a move closer to a ‘win at all costs’ litigation; it wasn’t until HMRC ran into difficulty in the case that they became keen to settle it.

Ultimately, the case may apply to other areas of taxation where HMRC have issued documents similar to the public list, before failing to apply them consistently to all taxpayers.

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