The Qualified Recognised Overseas Pension Scheme (QROPS) can be a high-yielding UK-pension investment system capable of tax savings and excellent returns if managed properly. Between 2006 when HM Revenue and Customs (HMRC) OK’d the pension programs and April/May of 2012 Guernsey was consistently either the most popular destination for QROPS or among the top three. Particularly in the later years preceding 2012, Guernsey had pulled well ahead of the Oceania states as the premier QROPS destination for British expats. As things were, it looked to hold that crown for the foreseeable future. However, that was before the HMRC implemented Statute Instrument 1221 (SI 1221), which shattered the Guernsey QROPS apparatus as it was.
SI 1221, which went into force on May 23, 2012, was intended to thwart tax avoidance. Its chief provision prohibited patronage of any investment scheme favoring preferential tax benefits for non-resident investors. The day SI 1221 took effect more than 99% (310 of 313) of Guernsey’s QROPS programs were cut from the HMRC’s list of registered providers, effectively ending further QROPS traffic.
Guernsey is close, familiar and comfortable for many expats, has hundreds of men and women who specialise in QROPS and do it for a living. Furthermore, the government has a huge incentive to retain, maintain and expand an attractive QROPS marketplace as so much of their economy relies on British pension investment. How Guernsey will emerge from the shakeup remains to be seen. The suggestion that they’re down but not out is a reasonable one.
Mario Vitanelli is a freelance writer and blogger who specializes in international politics and finance. His areas of expertise include Asian, South American and European expatriate economic policy and QROPS. When away from his keyboard, he enjoys photography and appreciates the rest of the Vitanelli family’s endless patience with his football dependence.