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Tax adviser attacks HMRC for inflexible stance on annuities

HM Revenue & Customs is being inflexible to the point of authoritarian by forcing people who reach 75 before A-Day to buy an annuity, says tax and business advis- ory group Vantis Financial Management.

People whose 75th birthdays fall after A-Day on April 6, 2006 are not required to buy an annuity.

Vantis poionts out that if an annuity is purchased and the holder dies, the entire pension fund is lost.

People who do not purchase an annuity can, in some cases, pass the money indirectly to their family through their pension funds.

Director Mike Pole says, due to their date of birth, some people could face a tax pen- alty of up to 40 per cent of their pension assets.

Pole says: “The 75 age bracket does seem to have been overlooked by the HMRC. We understand that there has to be a cut-off point but the system does seem unfair.

“If one client reaches 75 on April 4 and the other on April 6, one is set in a much better position than the other. While HMRC seems to be relaxing the rules, it seems to be inflexible to the point of authoritarian on this particular point.”

Unity Independent Financial Planning company director Jon Willis says: “The problem is where do you draw the line? It is unfortunate for the people who miss out but there has to be a cut-off point.”


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