Have a look at the web page issued by Barclays Wealth relating to their new Deferred Deposit Account. It says:
Take your interest when you’re good and ready
If you've got plans to change where, or how, you'll live in the future, there's a good chance your tax status will change too. So why not plan for this?
Our new Deferred Interest Deposit Account lets you defer taking the interest on your savings until a time that suits your tax planning. It's up to you to choose when the best time will be*.
Is it right for me?
The Deferred Interest Deposit Account is ideal if you're thinking about moving, working or travelling extensively abroad, changing income level for any reason or retiring.
How does it work?
When you open your account, you can set a specific date to receive your interest. Or, if you don't know when that will be, you can select until further notice. This means you can defer for as long as you like with interest being earned on your savings all the while - it's your choice.
That’s the spiel. The reality is different. First this is a blatant product designed to reduce the impact of the 50% tax rate — roll up the interest until you hope the Tories abolish it is the message. Second, it’s also a case of roll up till you leave the UK as a second message.
This is outright abusive planning deliberately engineered by a bank. The answer is simple: such accounts must be assessed on an arising basis, not a payment basis as is used for interest now. The law has to be changed in the Pre-Budget Report.
So much for ethics Barclays. And so much for any hope that the voluntary Bank Code of Conduct might work.
And on that my message is simple: they were given the chance to cooperate — now legislate it — with personal penalties (very big personal penalties) for all directors and employees found to be in breach of that statutory Code. As Stephen Herring of BDO said, some tax planners clearly need some time at Her majesty’s pleasure if they can’t learn what is acceptable.
This account is unacceptable.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
and what is the difference between this account and a “roll-up” fund; or are we closing them as well tonight?
People will run rings round a system if it is designed so that people can do that. It is a result of badly conceived and badly drafted legislation. Blame Parliament, the Civil Service, the government’s advisers and anyone else responsible. They are supposed to be working in our interest.
Looks very attractive. Thanks for the tip!!!!
Of course it’s like a roll up fund
They too should be subject to taxation on an accrued basis
I would suggest a deemed income of perhaps at least 10% of the fund value should be taxed each year irrespective of receipt – with the right to increase the rate in due course
That should solve the problem, for good
Why not go the whole way and suggest taxation on 10% of the value of companies each year – you’re clearly making this up as you go along.
It’s clear this 50% top rate of tax is going to be a disaster. It will only bring in an extra £2bn or so and that’s before you take into account the fact most people won’t pay it; it is highly likely it will end up costing the government money. You can look to close all these loopholes then the next one springs up. Governments will always be one step behind.
Most crucially, though, and you allude to it yourself, is that people know this 50% is a temporary measure. It isn’t going to be around in 3 or 4 years. That’s one of the reasons it will fail.
Any half decent accountant is now telling their client to defer capital expenditure until next year, to be less prudent about bad and doubtful debts this year and then write them off next year, bring forward invoicing to March 2010 etc. In fact this isn’t even rocket science and you hardly need an accountant to tell you.
Henry
Didn’t you know all policy initiatives are made up?
What did you think they were – revelation?
And you say you want to raise the quality of debate
Richard
Peter
Let me assure you – that could be defeated
And I’m expecting it will be published soon
Richard
Richard
I think the idea is people think about them for longer than the 15 seconds it takes them to type them. That may be a revelation to you but if you try it you may raise the quality of your debate.
Henry
Henry
So why don’t you give up the 15 second reactions and tell me what’s actually wrong with the idea
Would it stop the avoidance, or not?
That’s a debate – your pedantry is not
Richard
Richard,
What’s wrong with the idea is you can’t tax someone on 10% of something when they haven’t received any income to pay the tax (this was one of the reasons you didn’t like the attribution rules in Jersey). I strongly suspect HMRC have thought about this for longer than you have.
Henry
I’m suggesting charging tax on a liquid asset whose value is accumulating on an accruals basis – of course the means to pay exist
And haven’t you noticed the change in culture at HMRC? Perhaps you should
Richard