Disclaimer:
This communication is not intended for or directed to U.S.-connected persons. This communication should not be re-distributed or re-published without consent from Cameron James. Some of the content in this communication was provided by third parties of Cameron James. We have not independently verified every detail but believe the information to be reliable. None of this content should be construed as investment, legal, accounting, or tax advice.
Tax laws are complex and vary by individual. You should always seek advice from a qualified tax professional regarding your specific circumstances.
Key Points
- Interim Distribution Orders formally approved by the Federal Court of Australia (13 Nov 2025).
→ This confirms the interim distribution process described in our recent updates: available here and here. - Margin Loan with Interactive Brokers will be fully repaid, removing a major impediment to distribution.
- Large Corporate Trustees (STM, AllTrust & Relay) will be prioritised given their large share of the assets
- Interim Distribution Liquidation Window: 21 business days to liquidate assets, followed by a 20-day Distribution Window. This gives 12th December for the liquidation to complete, and then 21st January to complete all their payments.
- Updated Fund Retention:
- AUD $100m for Australian tax (potentially reducible via tax rulings).
- USD $10.18m for US tax.
- GBP £4.42m & USD $0.77M Unresolved Claims
- 15% of remaining balance, after above payments withheld as a Contingency for the potential IB claim, this is an estimated USD $105m.
- This gives a total of USD $187m, which could fall below USD $130m by the time of the distribution, so subject to significant change
- AUD $100m for Australian tax (potentially reducible via tax rulings).
- Total Assets on the Platform as at 31st October 2025 were USD $782m
- Potential to Reduce Tax Withholding Before Payments:
→ Court confirms tax retentions can be lowered if the ATO provides a favourable private binding ruling and written confirmation, which should be before the payments start. - Individual Tax Withheld Later, Not Now:
→ Interim payments will NOT deduct personal tax for beneficiaries.
→ Any tax must be withheld later from future distributions. - Order 11 Clarification:
→ Applies only to direct platform clients with self-managed arrangements.
→ Does NOT apply to SIPP/QROPS clients with Corporate Trustees (Relay, Alltrust, STM Malta, etc.) - 24th November – Last day for ad hoc and hardship Pension Requests
- 28th November – Last day for SIPP/QROPS Trustee Changes
The Federal Court of Australia has now formally confirmed the Interim Distribution Orders, dated 13 November 2025, allowing the Receivers to proceed with the interim distribution, largely in line with recent updates.
The Court has authorised the full repayment and termination of the Interactive Brokers margin loan, enabling the Receivers to begin the structured liquidation of assets over a 21-business-day window, followed by the 20-day distribution period. Again, as noted in previous updates, this does not mean they have waived any right to take legal action against them in the future.
The Court also set out updated tax retentions. Importantly, the Orders confirm that Australian tax retention may be reduced if the Receivers obtain an ATO private binding ruling and written clearance before payments commence, which is likely, although the amount is to be confirmed.
For beneficiaries, a key clarification is that no personal tax will be deducted from the interim distributions. Instead, any required withholding will occur at a later distribution stage once tax positions are finalised.
Another key point is there is a significant $105m retention, which could increase to $105m, which is a contingency for the IB claims and also a volatility buffer. An important point to note, this Contingency only impacts what can be paid now, and will not affect the amount ultimately received.
The Receivers have confirmed that a Change of Trustee must be submitted by 28th November. This Substitution process requires the provided template form, signed by the Member, the Current Trustee and the new Trustee to action the substitution. Given the due diligence that schemes undertake these days and the time it takes, anyone who has not submitted Transfer Out forms to their current Trustee many weeks ago, is incredible unlikely to have a new Trustee in place by this time. However, that is not the end of the world, and we discuss a lot of this in greater detail further down in this blog.
Finally, paragraph 11 of the Court Orders is only relevant to clients who held accounts directly on the Brite platform with their own trustee or SMSF-style arrangement. It does not apply to SIPP or QROPS members, where payments will continue to be made to the relevant Corporate Trustee (Relay, Alltrust, STM Malta, etc.).
For those direct platform clients, this update to the Orders does also open the door for appointing a new direct Investment platform to receive the distribution, removing the need to complete multiple transfers and the additional costs and risks that could occur. We are exploring this with our clients we have in this position, looking to plug in Novia Global, AJ Bell Investcentre or Charles Schwab, where possible, as the account to receive the distribution, so funds can be reinvested with minimal delay
Conflicting Advice on Trustee Changes — Our Observations
Over the past two years of assisting Brite members, we’ve seen a growing number of US residents encountering uncertainty around their Malta QROPS, trustee changes, and what the Brite receivership means for their next steps.
The aim of this article is not to provide formal tailored tax, legal, or investment advice, that must come from qualified professionals, but rather to share the practical observations we have formed after:
- Supporting dozens of Brite clients
- Engaging regularly with trustees
- Reviewing public IRS materials
- Speaking with multiple independent US and Malta based tax advisers who specialise in cross-border pensions
- Hearing directly from clients currently working with their own tax advisers or interacting with the IRS
This is guidance only, designed to help you ask the right questions and avoid actions that could have unintended consequences.
Key Cross Border Updates
- MGN has begun issuing first-tranche payments to existing trustees.
- Clients are reporting conflicting advice about making trustee changes between tranches.
- Multiple tax advisers have cautioned that certain actions taken by US residents may carry material tax implications, especially for Malta QROPS.
- IRS review of Malta pension structures remains ongoing, with no final Treasury regulations published.
- PFIC and foreign-trust reporting continues to be a central theme for US taxpayers with non-US investment structures.
- For many US residents, maintaining stability until final IRS guidance is issued has been highlighted by tax specialists as an important consideration.
Conflicting Advice on Trustee Changes — Our Observations
A number of Brite clients have fed to us that they have told something along the following lines:
“The first tranche will be paid to your existing trustee. After that, you should submit a Change of Trustee form to McGrathNicol (MGN) so that the second and third tranches can be paid directly to your new trustee, as two trustees cannot own the same pension at once.”
Based on our experience, discussions with trustees, and review of the receivership documentation:
1. Many Trustees Cannot Accept Frozen Assets Within a Receivership
The highest-quality, in our view, fully FCA-regulated integrated SIPP & platform providers, including those we routinely recommend, such as Novia Global, only authorise custody of approved investments on their platform. They cannot “take ownership” of frozen pre-receivership Brite assets which cannot be re-registered, traded, or custodied on their FCA-regulated platform.
Therefore:
Any SIPP provider claiming they can accept these frozen assets is likely not a fully FCA-regulated integrated SIPP and platform proposition.
Now, that by no means implies they are not a good Trustee, it just means that they are unlikely to have an integrated FCA regulated platform, so the platform will be non-FCA Regulated, unless the adviser is recommending two separate providers for the Trustee and Platform.
2. Limited “Good” Options on the Court Approved Trustee List
Despite what some advisers are apparently telling clients, our view is that MGN is probably unlikely to add to the Approved Trustees list.
If any new proposed Trustee, for a full transfer, is not on the Court Approved List (as, otherwise, the adviser would have likely been able to do the Trustee change before the first tranche), then a full transfer during the life of the Receivership is unlikely. In our opinion, they are unlikely to add to that list, given how late in the day we are and how long it took them to approve Bourse/AllTrust etc.
If they indeed allow a Trustee change post interim distribution, which we would love to happen, it will very likely only be to an existing approved Trustee.
We would also like to note that there are workarounds for those who can not complete full Trustee changes, so not the end of the world, especially if you have a QROPS or a SIPP for which you have not accessed any benefits, which you can discuss further with one of our advisers.
3. Why the “Two Trustees Cannot Exist at Once” Argument Is Misleading
Many clients have been told that “two trustees cannot have ownership of the same pension at the same time.”
Whilst that would technically be true, that is not what would occur in this situation.
We will not share the details of how we would structure such situations, as perhaps crosses the advice/guidance boundary, but you can discuss this all in detail with a Cameron James adviser, who will explain to you how it works, and how it is perfectly normal and standard in predicaments like this to have two pensions simultaneously, if only for a brief period of time.
4. If You Have Accessed Benefits, You Are Even More Restricted
UK legislation does not allow partial transfers of crystallised pension funds.
If you have a SIPP and have taken benefits/designated funds to drawdown, you cannot partially transfer those benefits in drawdown.
This means:
- Anyone who has accessed their SIPP will likely remain with their current trustee until the receivership concludes
- If you took the full 25% lump sum across the entire pot, your options are even narrower
This is not a Brite-specific issue — this is standard UK pension law, and not the Trustees giving you the run around etc.
5. Why Some Advisers Are Giving Misleading Guidance
Now, in our opinion, a lot of it is likely ignorance, as they don’t understand the nuances of UK pension rules, especially when benefits have already been taken and there are frozen assets, but some of it is likely due to commercial reasons.
If an adviser cannot work with your existing trustee (perhaps they do not meet minimum qualification requirements, or have associations that the Trustee does not want to engage with etc.), they have an incentive to push you toward a trustee change, regardless of whether the timing is practical, compliant, or in your best interest.
We cannot prove that is happening, but in our professional opinion:
There is a real risk that some advisers are giving advice to suit their own commercial limitations, not their clients’ long-term best outcomes.
Our Position on Brite SIPPS: Clarity, Compliance, and Practicality
At Cameron James, our position is grounded in:
- UK FCA pension-transfer and switch rules.
All our advisers are FCA regulated and work with UK residents daily, which means our understanding of UK pension legislation is, in our view, far deeper than most advisers who do not regularly deal with UK-based cases. This is one of our core USPs. - Receivership legal-process analysis.
- Operational reality with SIPP trustees.
- Cross-border tax and regulatory considerations.
- Client outcomes — not adviser convenience.
There are certainly situations where a Change of SIPP Trustee is warranted, and where we will recommend it.
However, there are also cases where the trustee likely does not need to be changed, and the more appropriate solution could simply be to insert a new FCA-regulated investment platform, while keeping the existing trustee in place.We covered this in detail in one of our Brite update blogs.
US Resident Brite QROPS Clients: Transferring to a Better Provider
As we highlighted previously, the ongoing IRS focus on Maltese pension arrangements (including QROPS funded with UK pension assets) makes any transfer back to the UK highly sensitive at this stage. This view is shared by the independent tax specialists we work with, as well as advisers who are directly assisting US resident Malta QROPS clients in active engagement with the IRS.
However, that does not mean you must remain with a trustee or adviser whose service levels, fee structures, or responsiveness are no longer fit for purpose.
In fact, a growing number of US-based Brite clients, and many non-Brite clients with Malta QROPS, have come to us citing the same recurring issues:
- High and opaque fee structures inherited from the original adviser
- Slow or unresponsive communication with STM or their appointed adviser
- Unclear or unsuitable investment strategies, including products that may create unnecessary US tax exposure
- No guidance on IRS reporting obligations or PFIC issues
Cameron James advisers have already helped multiple US-resident clients, including those linked to Brite, transition to stronger long-term arrangements. Many of these clients have:
- Reduced ongoing fees
- Increased regulatory protection around their assets
- Gained clarity on IRS reporting requirements
- Moved to transparent, compliant investment platforms
A well-structured QROPS with a competent trustee and a clear, transparent investment platform allows you to stabilise your position while the IRS finalises its rules. In our view, and in the view of several tax advisers assisting Brite clients, this is a far safer approach than attempting a return transfer that could be interpreted by the IRS as “sneaking out the back door,” as one tax adviser put it.
And that comment actually understates the potential risks, which we will expand on in the next section.
Concerning Advice Circulating: “Just Transfer Back to a UK Pension” or Worse — “Cash Out the QROPS”
One of the more concerning trends we are now hearing from new Brite enquiries is the rise of oversimplified and potentially dangerous advice being circulated to US residents with Maltese QROPS.
Several clients have reported being told by external advisers that they should:
- Transfer their Malta QROPS back into a UK pension (SIPP or occupational scheme), or
- Liquidate the QROPS entirely and “reset” their position
On the surface, these options might sound tidy or convenient. In reality, based on what clients are being told by independent US tax professionals, they could be highly problematic.
After reviewing these cases in more detail, it has become clear that many of the individuals making these recommendations appear not to have:
- Consulted a US tax adviser
- Engaged with the IRS regarding the original Malta transfer
- Brought their tax reporting fully into compliance (which could, depending on the client, involve substantial backdated tax liabilities, something only a tax adviser can quantify)
- Reviewed the Proposed Treasury Regulations on Malta–US pension treatment
From discussions with tax experts in this field, and from feedback provided directly from Brite clients who are currently dealing with the IRS or their own US tax advisers, there are multiple reasons why this guidance may be considered potentially reckless.
To be clear, the points below reflect what tax experts have told clients, and are not our own sole tax interpretation.
A return transfer could itself become a second “listed transaction”
If the IRS ultimately treats the original transfer from the UK to Malta as a listed transaction and/or a non-qualified rollover, then another transfer, from Malta back to the UK, may trigger the same classification again.
This could significantly increase scrutiny, potential penalties, and overall tax exposure.
Several tax advisers have also told clients that because the IRS currently does not recognise Malta QROPS as pensions, but rather as offshore foreign trusts, a transfer back into a UK SIPP, especially without prior IRS engagement or corrective tax filings, would technically be a US resident moving funds out of an offshore trust and into a foreign pension.
That sounds incredibly challenging to document on a tax return, especially after the fact, and, in our view, it does not sound like something the IRS would be too happy about, particularly if you have never reported it.
“Making it look like the pension was never in Malta” is likely, at best, futile
Based on conversations with trustees and the US tax experts we work with, the IRS has already received data flows from Malta. As a result, the likelihood of the IRS not knowing, or not eventually discovering, that a US taxpayer held a Malta QROPS is, according to these advisers, incredibly low.
Trying to “unwind” the structure or move the pension back to the UK without having made any prior engagement or disclosure to the IRS may also appear, at best, naïve, and at worst, evasive. Several tax advisers have warned that this approach can fundamentally change how the IRS views the situation.
Instead of being treated as a victim of bad advice, a category for which the IRS does have procedures to mitigate the damage, you risk appearing complicit in trying to conceal the original structure. This could mean losing access to the more favourable IRS treatment options, and in theory, could even create criminal liability (although most advisers agree it is unlikely the IRS would go that far, touch wood).
Liquidation Could Create an Immediate US Taxable Event
Taking a full encashment from a Maltese pension without prior US tax analysis could, according to the tax advisers we have spoken with:
- trigger punitive US income tax on the withdrawal,
- potentially trigger accuracy-related penalties,
- potentially trigger late-filing penalties if previous years were not compliant, and
- permanently eliminate any tax-deferred status your QROPS may currently have,
- as well as permanently remove any future benefit you might have gained from changes in the Proposed US Treasury Regulations.
We understand why some people are considering this option. Many are thinking:
“If the IRS views this as an Offshore Trust, basically like a foreign brokerage account, then all I need to do is pay the tax, deal with the PFIC filings, fix the last five years or so of returns, and be done with the whole Malta situation.”
Unfortunately, based on what tax advisers have told their clients, this line of thinking is naïve and risks producing an outcome that is significantly worse than the current situation.
We will explain why in the next section.
UK Inheritance Tax Reforms Increase the Long-Term Risk
Some advisers, and in some cases, members themselves, are either unaware of, or forgetting about, the April 2027 UK inheritance tax (IHT) changes that are due to impact UK pensions.
Under the proposed rules, UK pensions will be brought back into the scope of your UK estate for IHT purposes, regardless of where you live. This means that a transfer back to a UK pension could inadvertently expose you to both:
- IRS tax exposure, and
- HMRC exposure at 40% above your available allowances.
In other words, moving your funds back to a UK SIPP could add a second major tax risk, on top of the US implications already discussed.
This is yet another reason why a premature return transfer could be problematic, and why this needs to be reviewed with appropriate tax advisers rather than treated as a “quick fix.”
Many of These Advisers are Unqualified to Advise US Taxpayers
We are seeing advisers:
- without SEC registration,
- without familiarity with PFIC rules or US treaty analysis,
- without PI/E&O cover for US clients,
- recommending transfers that expose clients to potentially life-altering tax risk.
It is deeply concerning, both professionally and ethically, that such advice is being promoted to vulnerable Brite clients.
We also discussed much of this in great detail in a QROPS vs SIPP Blog we published earlier this year.
Why the IRS View of the Original Malta Transfer Matters — And Why “Undoing It” Could Make Things Worse
A critical piece of the puzzle that many advisers and Brite victims from our perspective seemingly fail to recognise is how the IRS did/will likely view the original transfer from a UK pension into a Malta QROPS.
Based on the IRS’s published guidance, the Proposed Regulations, the “Dirty Dozen” notices, the SEC Charging document for the firm that was charged and fined for many of these transfers, and the shared understanding of multiple US/Malta tax specialists, the picture that has emerged needs to be fully taken on board before any decisions are made.
The below is the generic view we have formulated based on all of our dealings with tax advisors who specialise in this area of cross border tax advice, as well as those US Resident Brite members who have engaged their own tax advisors and/or are engaging with the IRS directly.
1. The original UK → Malta transfer is likely treated as a taxable distribution
Because a Malta QROPS is not recognised as a pension by the IRS, the IRS position is likely to be:
- This was not a rollover into a “foreign pension”
- It did not qualify for tax-neutral rollover treatment
- Therefore the transfer was, in substance, a withdrawal from your UK pension
- That withdrawal is then taxable in the US (for US residents)
This interpretation is reinforced in the Proposed Treasury Regulations, and was also alluded to by the SEC in their charging document.
2. After that deemed withdrawal, the IRS likely views the receiving structure as an offshore foreign trust
Once the “withdrawal” has occurred, the funds land in what the IRS regards as a foreign grantor trust—not a pension.
This means:
- IRS sees this as a cash contribution to an Offshore Foreign Trust
- You should have been filing specific tax reporting forms each year
- The trust potentially owes annual reporting
- Gains are likely not sheltered
- Income is likely taxable
- Penalties for non-filing could be substantial
There is likely no “hiding” this structure by unwinding it later.
3. Because the structure is not viewed as a pension, it is taxed like a brokerage account
Without recognised pension status, the Malta vehicle defaults to being treated like any other foreign investment account. That means:
- No tax deferral
- Tax on gains
- Tax on Dividends
- Tax on Income
In other words, it may have looked like a pension, and may have been sold as a pension, and frankly, in our view it probably should be (and might well be in the future) a pension, but the IRS has a different view, and their view is the one that matters.
4. And because it’s foreign, the dreaded PFIC regime applies
Nearly every fund type commonly used in Malta QROPS, UCITS, SICAVs, OEICs, managed funds, non-US ETFs, counts as a Passive Foreign Investment Company (PFIC).
That means:
- Tax filings required for every PFIC every year
- Unrealised gains may be taxed punitively
- “Excess distribution” rules can apply
- Interest charges can accrue on prior years’ gains
- Back-dated filings must be reconstructed (often requiring forensic accounting)
A typical QROPS portfolio we have reviewed (many Brite platform portfolios, especially those in US listed ETF’s, were not subject to PFICS) has c.8-12 investments that qualify as PFIC’s.
That can be 8–12 tax forms per year, every year since the original transfer.
This is another reason that simply moving back to a UK pension, or liquidating, is incredibly unlikely to not make the underlying issues disappear. According to these tax experts we have spoken with, the IRS will expect PFIC compliance for each year since your money entered Malta and was invested in PFIC’s.
5. Now consider the tax minefield triggered by a transfer back to the UK
Some advisers, many of whom lack SEC authorisation, cross-border experience, or even PI/E&O cover for US advice, are recommending that US residents “just transfer back into a SIPP.”
This advice ignores several critical facts:
- You cannot reverse the transfer back into a final salary scheme, so no exact reversal for those who transferred from such schemes is technically possible
- Any transfer now is likely technically from an offshore foreign trust into a foreign pension
- If the original transfer is treated as a listed transaction, the new one may be too
- Without full disclosure to the IRS, it may look evasive
- Penalties can compound the longer reporting is unresolved
Tax specialists warn that:
“You may convert one listed transaction into two, with two sets of penalties.”
And attempting to “move the pension home and forget Malta happened” is simply not realistic and asking for trouble, in our informed view.
6. And if you fully liquidate the QROPS? That might be even worse.
Some clients have been told:
“Just cash out, pay taxes on your gains/income, and wipe the slate clean.”
This is likely regrettable advice.
Liquidation, from what tax advisers have told us, potentially:
- Triggers a taxable distribution
- Does not erase past PFIC obligations
- Does not resolve missing tax filings
- Does not eliminate scrutiny or tax and filings obligations of the original transfer
- And can appear like an attempt to destroy the evidence of the foreign trust
To put it bluntly: If you liquidate without cleaning up your IRS reporting, the fact pattern is not good.
One tax adviser described it as:
“The worst possible scenario in the eyes of the IRS:
A foreign trust funded from a UK pension liquidation, never reported, tax bills and penalties never paid, and then liquidated during an ongoing jurisdictional IRS inquiry/enforcement action, all whilst trying to claim favourable tax treatment.”
The potential consequences are massive:
- Back taxes
- Accuracy-related penalties
- PFIC penalties
- Non-tax filing penalties (potentially up to as much as 25% of the account balance per year)
- In extreme cases, risk of criminal referral for evasion (rare, but possible)
This is why we have been absolutely clear, in our opinion, which we have formed after countless hours of engagement with specialist tax advisers, US Resident QROPS members, and compliance experts:For US residents, now is unlikely to be the time to transfer back to a UK pension or liquidate the QROPS without specialist tax/financial planning advice and transparent engagement with the IRS.
Cameron James: Our General Position on UK Transfers & Liquidations for Malta QROPS held by US Residents
If you are a US resident, we believe that most should not transfer your Maltese QROPS back to a UK pension until the IRS completes its investigation and publishes final rules, and even then staying in Malta could very well be the best advice. Trying to transfer back not only could cause the extensive issues noted above, but it also could remove your flexibility to benefit from the outcome of the final Treasury regulations, which could result in considerably better treatment.
We also do not believe most US residents should liquidate their QROPS without formal US tax advice specific to their circumstances, and even then, should probably wait for the final Treasury regulations to be in place so you can accurately assess your situation, how to get into compliance, and the path forward.
This is the view not just of our advisers, but of every competent, informed US tax specialist we have consulted during this process. This is also the view of those we have spoken with who are in active engagement with the IRS around these structures.
Right now, the safest path for most people is to, in our informed opinion:
- Stay within a compliant QROPS structure
- Improve the trustee / platform / adviser arrangement
- Invest in a PFIC Compliant Portfolio (so no more punitive tax and filing)
- Engage with a tax advisor, with specialist knowledge and experience assisting US residents who have overseas pensions and Trust Structures, specifically in Malta
- Ensure all IRS reporting is brought up to date as best you can
- Wait for clarity from IRS investigations and the proposed Treasury regulations
Once the IRS has finalised its position, then reassess whether a UK SIPP makes sense.
For many clients, that may eventually become the optimal path. But doing it now in our opinion carries asymmetric risk, small upside, enormous downside.
How Cameron James Is Supporting Brite Clients
At Cameron James, our advisers have been supporting Brite clients since the earliest stages of the receivership, guiding investors through trustee reviews, documentation preparation, and cross-border reinvestment planning.
We help clients to:
✅ Review financial positions and deliver holistic, transparent fee-based financial planning.
✅ Estimate Brite entitlements and likely interim distribution amounts.
✅ Advise on Trustee and Platform suitability and manage & submit trustee-change process, where appropriate.
✅ Liaise directly with McGrathNicol and trustees to confirm payment details and account setup.
✅ Prepare reinvestment plans on FCA-regulated, fee-only platforms, where possible (e.g. Novia Global) or Platforms with PFIC Compliance, like Morningstar Wealth International, where applicable.
We operate with full regulatory oversight, no hidden commissions, and no product bias, ensuring each decision is driven purely by client outcomes and compliance integrity.
Take the Next Step Today
👉 Book Your Free Consultation
We will review your current trustee position, assess your likely Brite distribution, and outline the compliant reinvestment options available based on your jurisdiction, tax status, and long-term objectives. Our goal is to help you stabilise your position and make informed, defensible decisions at every stage.
Disclaimer:
Some of the content in this communication was provided by third parties of Cameron James. We have not independently verified every detail but believe the information to be reliable. None of this content should be construed as investment, legal, accounting, or tax advice.
Tax laws are complex and vary by individual. You should always seek advice from a qualified tax professional regarding your specific circumstances.