Taxation of QROPS investment income

[AyG]

I'd always assumed that (excluding UK property) all interest income within a QROPS was tax free - and if an investment paid interest net of tax the custodian would reclaim the tax. I was therefore shocked to receive a copy of an Annual Tax Summary from Cofunds stating that several hundred pounds of income tax had been deducted at source from two interest payments and hadn't been reclaimed. (The investment concerned was Aviva Investors Asia Pacific Property Fund.)

Cofunds refuses to deal with me directly (even though I'm the designated investment manager), and an enquiry through the QROPS scheme manager has not provided a meaningful response.

Questions: Am I right in thinking that income tax should have been reclaimed on my behalf? Is there any reason for the tax not to be reclaimable on an overseas physical property fund?

Thanks.

[SantiSuk]

I don't know the answer, but you should approach the relevant regulator if those who should are not giving answers to your legitimate questions that satisfy you. Maybe it is not platform provider's responsibility, but they should at least tell you that and tell you who's responsibility it is.

Maybe they have answered that you should ask your financial adviser or seek your own tax advice. These are legitimate responses and if you don't have either I guess that is why you are here

[AyG]

After three months I finally have my answer (from within the Guernsey Government Office): it is not possible to reclaim interest where interest has been deducted at source for an investment held within a Guernsey QROPS.

In short, if you have a Guernsey QROPS, only invest in instruments where interest is paid gross. (I can't comment on other regimes.)

(The particular investment where I had tax deducted and now can't reclaim the tax was a UK-based Asian property fund which doesn't have a gross class.)

The marketing spiel that stresses how your fund escapes the UK taxman's greedy grasp isn't telling the full picture.