‘Outrageous’ trusts move escalates row with taxman
Inheritance trust clampdown will cost families hundreds of millions
The government’s ‘outrageous’ clampdown on inheritance trusts announced in
last week’s Budget will cost families hundreds of millions of pounds a year, it
has emerged.
The row over the move threatened to escalate tension between the profession
and HM Revenue & Customs this week. The government announced new tax charges
on certain trusts last week. Though HMRC has been consulting on trusts as a
whole for several years, it has never mentioned the changes introduced in the
Budget.
John Whiting, tax partner at PricewaterhouseCoopers, told MPs on the Commons
Treasury select committee this week that the lack of consultation was ‘nothing
short of outrageous’.
Other senior advisers expressed deep regret about the lack of discussion on
the trusts move, which was one of several unconsulted changes in the Budget. ‘We
work for free to try and make the tax system work better. It’s really appalling
to make these changes without consultation,’ said Anne Redston of the Chartered
Institute of Taxation.
Maurice Fitzpatrick of Grant Thornton told Accountancy Age that, even if many
people are deterred from setting up the trusts following the crackdown, the move
will eventually raise ‘hundreds of millions’ for the taxman. The effects will
not be felt for some years, but ‘you wouldn’t do this for three and six pence’.
The figures are thought to be the first the profession has produced on the
change. The Treasury has predicted a £15m windfall next year and in 2008.
Paymaster general Dawn Primarolo has denied the clampdown will have a
widespread impact on trust arrangements. The changes affect ‘accumulation and
maintenance’ trusts in particular.