A FORMER British expat is battling punitive demands from the taxman after she lost her €400k pension pot in a Spanish scam and had to bolt to the UK, facing financial ruin in a caravan site near Bournemouth.
The 66-year-old Brit, named Cassie to protect ongoing legal actions, had refurbished a stunning villa in the Algarve, Portugal, with plans to make a living hosting a retreat for artists and supplemented by her pension.
But these dreams of retirement were dashed when her private pension – transferred via QROPS into toxic investments without her knowledge – began to nosedive, forcing her to abandon her villa and retreat to the UK with just €16k salvageable from her €400k investment.
But the nightmare was not over. No sooner had she submitted UK tax returns, HMRC began punishing Cassie with a €70k tax on monthly pension withdrawals due to her violating a 5-year double taxation treaty by returning home early from overseas.
It comes as the Daily Mail revealed that thousands of Brits have collectively lost €12billion in pension scams that often see victims plunged unwittingly into tax arrears, and poverty.
“I miss my life, my home, the animals I left behind behind, the lady with the goats down the lane, my trying to speak the language, badly, and laughing – it’s all gone,” Cassie told the Olive Press.
“I am very depressed, very low and very broke. I try to pretend my life is normal, wishing others a Happy New Year, when I don’t even know how I will cope in it, if at all.
“But I won’t give up justice, because that is exactly what the scammers and pension trustees want. If a little of my story can protect others in some way, I am willing to speak up.”
On the advice of defunct wealth management firm Continental Wealth Management (CWM), formerly based in Denia on Spain’s Costa Blanca, Cassie transferred her €400k private pension via QROPS in 2015.
The HMRC-recognised scheme would allow her to escape UK income tax, typically between 20%-45%, and avoid death taxes.
QROPS users, however, must NOT return to the UK within five tax years in order to the UK income tax, according to UK-EU-wide double taxation treaties that would make Cassie subject only to Portugal’s lower income taxes.
This, Cassie maintains, was unknown to her as she says CWM advisor Dawn Kirby waved goodbye through the gates of her Portuguese dream home.
By 2016, CWM’s widely-reported reckless investments into high-risk, so-called structured notes, had ruined her pension pot.
Unable to support herself, Cassie sold her villa, and returned to the UK after cashing in on a surrender value lump sum of €16k – all that was left of her pension pot following hefty exit fees.
But Cassie’s ‘downward spiral’ continued, as quarterly pension withdrawals of €10.6k taken while in Portugal were now liable to UK income tax – which, on top of her lump sum withdrawal, amounted to a punishing €70k with daily penalty charges for not paying up.
“HMRC do not recognise victims of failed pensions, nor reasons for breaking the five-year double tax treaties,” Cassie told the Olive Press.
“Until you can submit proof of genuine reasons you then are under a criminal law investigation.
“If you’re situation means you can’t afford accountants or lawyers, then you keep selling homes and downsizing until you live in a tent, or on the streets under a cardboard box.
“The situation will apply to all EU countries expats reside in, including Spain.”
Cassie is currently appealing that HMRC recognise her as a pension scam victim as reason for violating the tax treaty, while she is fighting her QROPS pension trustee for compensation.
“When I had to submit what compensation I am viable for, I cried for a long time,” Cassie said.
“It isn’t just the money losses: you lose your home, your future, your animals, friends – everything. How does one measure emotion, stress and hope?”
Sam Kelly, a Costa Blanca-based financial adviser, and outspoken pension scam critic, told the Olive Press that HMRC and pension trustees were not the direct targets of blame for Cassie’s appalling situation.
“Sadly there is a common thread in all these stories: greedy financial advisors driven by high, generally undisclosed, commissions rather than their clients’ wellbeing,” Kelly, who works for Chorus Financial, told the Olive Press.
“Still today in Spain we see these practises on an almost daily basis, and it’s a ticking time bomb.”
Kelly urged expats to look out for ‘risk-free’ returns – in Cassie’s case, CWM advisers told her to expect ‘10% profits’ annually on her investments – as well as lengthy product tie-ins with hefty exit fees.
“These are pretty much a guarantee the advice is driven by a hefty commission being paid to the advisor,” Kelly said.
“In Spain there is currently nothing in place to force financial advisors to disclose their commissions, and sadly we see over 90% of advisors operating here taking eye-watering fees without their client’s knowledge.
“In the UK, that would be illegal under FCA rules.”
Margaret Snowdon, chairwoman of the Pensions Scams Industry Group, said that ‘scammers have long targeted expats living in Spain and other territories’ due to relaxed regulations.
“Overseas, it is more difficult to judge whether an adviser or introducer is properly authorised and under which jurisdiction they operate. Often there is no UK protection, which makes the cases all the more tragic,” she said.
Snowdon said she was pushing for new laws to protect expats from overseas pension scams.
A spokesperson for HMRC said: “We empathise with anyone who believes they have been misled about their pension investments and encourage them to report scams to Action Fraud on 0300 123 2040.
“HMRC has done much to combat pension scams. In particular with overseas pension schemes, we introduced the Pension Age Test in 2015, and the Overseas Transfer Charge in 2017 – this led to the removal of over 600 overseas schemes (ROPS) in 2017, further safeguarding taxpayers and their savings.
“It is the responsibility of pension scheme administrators for conducting due diligence – for example checking if tax will be owed – before transferring people’s savings overseas. We encourage individuals to seek professional advice before transferring their pensions.
“We will continue to come down hard on scammers who we identify, working closely with the Pensions Regulator and Financial Conduct Authority in a cross-agency approach.”
Cassie’s pension scheme administrator has not been disclosed due to ongoing legal actions.
CWM advisor Dawn Kirby could not be contacted for comment.
Jody Smart, former director of CWM, declined to a request for comment.