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Revenue asks ABI to help halt turbo-chargers

The Revenue has asked the ABI for help after admitting it has made no progress in finding a way of preventing people recycling tax-free cash back into their pensions.

The practice, called turbo-charging, enables people to rake in extra tax relief.

The industry universally condemned Chancellor Gordon Brown for introducing a measure to ban this practice in his pre-Budget report without any guidance on how it can be policed.

As a result, industry commentators confirm that the Revenue has been struggling to find a solution and is relying on ABI members to find a practical answer.

Scottish Life head of pensions strategy Steve Bee says current thinking is to make IFAs police the sector and tell the Revenue of any instance of turbo-charging. This would put an additional burden on IFAs.

An HMRC spokesman says: “HMRC can confirm that the situation remains as announ-ced in the pre-Budget report. We are hoping to publish draft legislation and guidance on this soon and at that point we will be inviting comments from the ABI and other interested parties.”

Informed Choice managing director Nick Bamford says: “This is the equivalent to a policeman asking a burglar how to stop him from thieving. I think the ABI should tell the Revenue that they made this mess and they should sort it out themselves.”

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