The pensioners who had used their pension funds to purchase UK property have been warned by Revenue in the UK that Irish Approved Retirement Funds (ARF’s) are not exempt from UK taxes as they had been advised when setting up the pension funds.
The UK tax authorities are now asking Irish ARF holders to voluntarily declare any untaxed rents and capital gains or face legal consequences.
These pensioners were advised that investment in UK property would be tax free in the same way that investment in Irish property is not taxable. Many pension funds invested, on expert advice, in the UK in the late part of the last decade of the nineties and early part of the 2000’s.
It is argued by experts that this is an anomaly in the law. Under European Law, they claim, Irish investors should be treated the same as indigenous UK investors for tax purposes. It appears that Her Majesty’s Revenue thinks differently. They feel that the stance of the UK authorities may well be subject to a legal challenge, but this could be a long process, leaving pensioners facing a hefty bill in the interim.
The UK tax authority’s argument is that ARF’s are not formally pension products in Ireland, although they avail of the same tax free status.
It will be interesting to see if a legal challenge is mounted.