Trust complaints are 'misconceived'

The profession and the taxman are due for new clashes on the trust clampdown,
as government sources told Accountancy Age that some of the row had
been a ‘hoo-ha’ and that many of the complaints about the move were
‘misconceived’.

A senior HM Revenue & Customs official refused to repudiate Treasury
suggestions aired in The Times that the row had been got up by
‘publicity-hungry accountants and opportunistic Tories’.

‘The period between Budget day and the publication of the finance bill always
leads to a fair amount of speculation. A lot of that on this measure has been
shown to be misconceived,’ the source said.

HMRC believes that the finance bill has ‘taken the heat out of the
situation’, yet advisers continue to raise issues. Institutes, which last week
in an unprecedented alliance issued a release calling for delay, are now working
on their own figures analysing the impact of the move.

HMRC sources said that £15m was a ‘good conservative estimate of the likely
yield’, but added that the measure was aimed at ‘the use of these trusts for
aggressive tax planning by seriously wealthy people’.

If the tax planning concerned was really aggressive, however, many will
question why it is not worth more to government.

HMRC director-general Dave Hartnett said on BBC’s Moneybox that HMRC
was in ‘listening mode’ on the issue, a suggestion our source sought to clarify.
‘I don’t think anyone should regard this legislation as in any sense fluid or
anything like that,’ the source said.

No new HMRC problems have been brought to Hartnett’s attention since, it is
understood.

Responding to different scenarios of those affected, an HMRC official said:
‘These are interesting questions. Whoever is raising them really ought to read
the finance bill quite carefully.’

HMRC figures reject the argument that it should have consulted, saying the
announcement puts a ‘stake in the ground’.

‘There is time for people to make alternative arrangements in an orderly and
transparent way,’ they said.

Life policies will not be affected, they added: ‘For new policies it is
almost impossible to say what the valuations might be (at the time the tax is
charged).’

‘This is no big deal. The life insurance industry is saying the finance bill
as published has very significantly removed its concerns.’