Gaines-Cooper Ruling Makes QROPS More Attractive, Guernsey Provider Says

High-net worth Britons who live overseas have a greater incentive than before to move their pensions abroad following last week’s Court of Appeal ruling against Robert Gaines-Cooper, a Guernsey Qualifying Recognised Overseas Pension Scheme (QROPS) provider says.

Because a pension pot is typically a major asset, leaving it in the UK when one is seeking to be considered non-resident in the UK for tax purposes could be risky, now that HM Revenue & Customs has shown it intends to challenge the non-resident status of expatriate Brits more aggressively, according to Carey Pensions and Benefits director Tim Parkes.

“In addition to the many benefits [a QROPS plan offers], for those that have moved abroad, there’s now the added advantage that it moves a major asset out of the UK,” Parkes says.

As reported in the taxation news section, the Court of Appeal upheld a multi-million-pound ruling against Robert Gaines-Cooper and in favour of HMRC. The finding that he remained eligible for UK taxes even though he had lived in the Seychelles since 1976 and had never breached the so-called 91-day rule has been seen as having major potential implications for other wealthy expatriates who consider themselves exempt from UK taxes.

But the Court of Appeal judges found that England had remained “the centre of gravity” of Gaines Cooper’s “life and interests” even though he technically lived abroad. His estate in Oxfordshire and other ties suggested that he had not severed his social and family ties with the UK, they said.

HMRC: QROPS for Expats

An HMRC spokesman said it was important that taxpayers realise that QROPS are intended for use by genuine non-resident expatriates, not for UK residents seeking to avoid UK tax obligations.

He declined to speak on the record about the Gaines-Cooper case specifically, but said HMRC remained "committed to ensure that all those who are resident in the UK pay the tax that is due and this judgment will aid that effort".

"It is also useful that the Court of Appeal has acknowledged that HMRC can increase compliance activity in an area so that it can ensure it catches those who may have previously not paid tax that is due," he added.

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