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What advisers are saying: Getting to grips with GAAR

Phil-Wickenden-Tax-Planning-250.jpg

A week out from the scheduled arrival of Baby Wickenden, I have discovered – through various pre-arrival purchases – that an entirely new level of soft exists.

Furthermore, it has become apparent that this rarefied flocculence is reserved (seemingly) exclusively for babies and baby products. My home-wear feels coarse by comparison. Which raises the question “why can’t the same soft standards be applied (or at least be available) to the post-toddler market!?”  If ever there was a need for tighter regulation it is here, surely? Treating Customers Fluffily anyone?

No, I thought not. Anyway, I’m not the only one clamouring for that which we have not. While the General Anti Abuse Rules have contributed to a turning tide of public opinion against minimising tax liabilities through various (legal) loopholes there are a small (and not necessarily representative)  group who have had their interest piqued by the possibilities from the publicity.

Most conversations we’ve had with advisers confirm that they expect that GAAR will, generally speaking, have little detrimental effect on the main “retail” IHT planning solutions including BPR based schemes, discounted gift trusts and loan trusts. But that doesn’t mean it’s not a game changer.

As advisers retreat from the perceived “cliff edge”, steering clear of overly complex and aggressive schemes, there’s agreement that, as one adviser put it, “there’s been too much focus on innovation and pushing the boundaries”. There’s a sense that tax avoidance feels rather like the new tax evasion, which will please the government no end as that is, arguably, its principal objective with GAAR, which is certainly not designed for scale.

The message is clear: boring is the new exciting.

That said, there is also probably a need for re-clarification of where that cliff edge lies. While advisers are concerned to stay the right side of the “tax planning line” there is a clearly stated need for i) a deeper and wider understanding of the solutions currently available and their application; and ii) clearer articulation of the benefits and risks (and more importantly the relevance) associated with solutions.

But while caution is the watchword for most, a small number of advisers have encountered quite the opposite with pockets of small corporate clients in particular. There is anecdotal evidence of The Starbucks Factor whetting some plucky clients’ appetite for more aggressive planning rather along the lines of “if it’s good enough for Starbucks, it’s good enough for me”.  Good luck with that! 

Phil Wickenden is managing director of So Here’s The Plan phil@soherestheplan.com

Extracts from IFA interviews….

Phil Wickenden June 20

 

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