Green light for Isle of Man 50C QROPS

HMRC has confirmed that a scheme approved under the new 50C legislation can satisfy the requirements to be a a recognised overseas pension scheme, International Investment has learned.

A review of the Isle of Man’s pension legislation by HMRC began in December 2010. No 50C QROPS have been registered in the Isle of Man since the review began.  Boal & Co’s “Trinity” pension scheme has been the only registered QROPS of its type as it was tax-approved under the Isle of Man’s “section 50C” legislation on the same day that the new Manx legislation took effect in October 2010, which was prior to the HMRC review. Pre-existing IoM QROPS set up before 50C legislation came into play are not affected by the review.

Although HMRC has not yet officially announced the review findings, International Investment contacted Boal & Co who welcomed the news. However, the company felt it unfortunate that the process has taken so long and caused such confusion.

Managing director, Gary Boal, said “Anyone who took the time to familiarise themselves with the relevant legislation, as we (and our legal advisers) had done, would quickly come to the conclusion that the UK requirements in relation to the maximum pension commencement lump sum were actually quite different for QROPS to what the market had assumed.  Specifically, the UK legislation requires that at least 70% of the transfer value paid into a QROPS has to be designated to provide a pension. This is quite different to the traditional QROPS scheme which limits, quite unnecessarily, the lump sum to 25% or 30% of fund value. The 50C legislation is in some ways a carbon copy of the relevant UK QROPS legislation, importing UK pension rules into Isle of Man tax law, and it should therefore be no surprise to anyone that a 50C scheme will be capable of satisfying the requirements. The Isle of Man 50C legislation was always drafted to ensure that it fitted with the UK QROPS requirements.  Some parties may not have understood at the time what the requirements were, but with the passage of time and the gaining of knowledge many more Isle of Man providers have sought to create 50C schemes.  We will welcome them to the market.”

In anticipation that new 50C QROPS will be approved by HMRC in the coming weeks, Boal & Co says it will now offer a 3-month special deal on Trinity to advisers, details of which will be on their adviser extranet at www.trinity.im