My good friend Neasa MacErlean from the Observer had an interesting article in yesterday's paper. As she put it:
Wealthy people over the age of 75 who are looking for an alternative product to an annuity could be in for a shock: the government is considering clamping down on one such product, known as the 'alternatively secured pension' plan.
ASPs, introduced on 6 April this year, allow people to leave their pension funds invested after the age of 75 - rather than forcing them to buy an annuity.
And for some people, as she noted, this is a really important issue:
ASPs were originally designed for religious groups such as the Plymouth Brethren, who have moral concerns about annuities. They would see an annuity as a mortgage upon a soul, 'a way of undermining the challenges God sets by keeping secret from human beings the date of their deaths'.
But guess what? Again, to quote Neasa:
Now, however, only four months ASPs were introduced, the Treasury is considering calling a halt to them. Tax experts, it believes, are advising some clients to take out an ASP in order to pass on a pension fund to dependants and therefore avoid inheritance tax.
And who is objecting?:
Tax advisers are outraged at the possibility of a government U-turn.
Baker Tilly are named.
But as the Treasury say:
'We introduced this special concession for a very small group of people for a specific set of religious reasons, and it is unfortunate that a group of tax avoidance advisers are wilfully seeking to abuse it. We will take all action necessary to clamp down on this abuse but, if it persists, we will unfortunately have to remove the concession entirely. It is unfortunate that the same tax advisers who always complain about blanket legislation then regularly seek to exploit any concessions and reliefs that we introduce.'
As usual, tax advisers are intent on spoiling the show by going for the 'legally possible' option. Ethically it's time this was stopped. But you can be sure, the advisers won't be doing it.
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I am sorry but I have to object Richard, why should one set of people through religious or other reasons have a tax advantage over others.
And that is what was introduced with the ASPs, no matter how you look at it, it gives a tax advantage.
The only way to cut out cleaver advisors using the legitimate tax rules/concessions to benefit their clients is to simplify the tax system, there is no other way!
And if I had a client that such clever planning could help mitigate future tax liabilities it is my duty of care to that client to use it, and it is the governments duty of care to society as a whole to simplify the tax system to make it more transparent and fair to all, and not give concessions’ to small/any groups.
Jason
I’m going to agree to differ
I do so partly by referring to your obvious typo – when you refer to ‘cleaver advisors’, because in truth I think that’s exactly what they are. They are cleaving the tax system into unmanagable bits when if they actually considered that they had an ethical duty to society first and their client second (and I think this is essential as it is the basis of the licence a society grants to a profession which enables it to extract its super-normal profits in return for the privelieges it is given) this would not happen.
In other words, I think your ethical argument is wrong. And the Revenue have got their ethics right.
Sorry
Richard
Richard, I am glad we can disagree, this is what makes tax interesting, there is not always a right or wrong answer, it is as much about opinions and interpretation, as anyone who has sat opposite our friends from the Revenue will testify.
But, and please consider this, it is the government (of the day) that has a duty to society as a whole, and the professional advisor who has a duty to his/her client, and not the other way around as you suggest.
Jason
I think you’re ignoring my point about the “licence to operate” which a profession has.
The ICAEW is, for example, granted priveliges by Royal Charter. So do the other institutes. I think it has a duty to society first as a result, as do its members.
Again, we might have to agree to differ.
Richard
The sooner these deep ethical issues are resolved the better. The profession is imploding because of this and its insistence on following a model rooted in antiquity that has no bearing on modern life.