Treasury warning over SIPPs schemes

Chief Treasury secretary Des Browne has warned potential
self-invested-personal-pensions scheme providers that the government ‘will not
hesitate to act if there is evidence of abuse’.

He issued the caution following reports of proposals to encourage investment
in holiday homes and other domestic property, which he insisted is ‘unlikely to
be an appropriate investment for most people’.

Browne insisted during a Treasury questions session in the Commons that: ‘The
limitations attached to such investment mean that is is unlikely, in our view,
to have an appreciable effect on the housing market.’

He added: ‘If we discover a loophole or identify distorting effects, we will
take appropriate action.

‘As to the policing of the SIPPs tax regime, Her Majesty’s Revenue and
Customs will ensure that the tax privileges granted to pension schemes are used
for their attendant purpose and we will target compliance procedures
accordingly.’

He strongly defended the pensions simplification package, claiming it
provides benefits for all taxpayers, including those on lower incomes.

During exchanges Lib Dem MP Chris Huhne claimed an investor would normally
need £1m in assets in order to put one residential property into a SIPP while
maintaining a reasonable diversification of assets within his fund, and
questioned whether government advice was adequate to prevent a pensions
mis-selling scandal.

Labour MP Jim Cousins called for examination of the rules for attributing
rent to properties in a SIPP and tax rules on debt, so that it would not be
possible to use SIPPs to pass on to successors untaxed tax relief supporting
large investments.

Plaid Cymru (Welsh Nationalist) MP Adam Price said the Revenue had already
had to withdraw guidance on the personal use of holiday homes and admit it was
wrong. He claimed the government had got into a muddle, which risked costing
taxpayers billions of pounds and sending property prices soaring.