John Lawson of Standard Life seems to be on a mission to wind up the Treasury. That is usually a jolly wheeze but I fear that lasting damage will be done to the industry.
Last year, he inaccurately and very publicly suggested that the Treasury would be giving away 4bn in tax relief on residential property in Sipps. Shortly afterwards, the Treasury executed its abrupt U-turn, which he promptly described as outrageous.
In his May 4 article, he advocates borrowing 78,000 to wash through a registered pension scheme, in a series of steps in which an increased pension commencement lump sum is clearly envisaged. We are told this is all above board and Standard have already begun to discuss it with some IFAs. But it seems clear to me that the example in the article given will if applied to most real-life circumstances be caught by the anti-recycling legislation.
The resulting tax charges would be punitive. If, for example, the scheme is a one-person scheme with no other funds in it, the total immediate tax charges, including a deregistration charge, would probably be close to 50,000.
In the May 11 edition, he publicises a massive loophole that we are very excited about, exploiting a particular form of pension. Presumably, we can look forward to him telling us how outrageous it is when the Treasury, having read a copy of his latest piece, adds yet another overly blunt anti-avoidance measure to this years Finance Bill to close this loophole. Anyone reading Standards output on small self-administered schemes and Sipps would be forgiven for thinking that they alone were aware of all these issues.
They are not.
Many of us who have been close to the heart of the legislative process for some time know that the legislation has more holes in it than a sieve but we also think that what is genuinely outrageous is the use of these sensationalised stories to gain publicity, given the kneejerk reactions they inevitably produce in the Government.
Does Standard not understand how paranoid the Treasury is about tax abuse in pension schemes? Have they not read the mass of anti-avoidance measures already in the latest Finance Bill? What is a household-name insurer with Standard Lifes market profile doing anyway, pushing cynical tax planning ideas using a type of scheme in which it previously seemedto have little interest? Does it want to play a long-term part in building a stable tax regime, or not?
Nick White, Solicitor, White & Co, Teignmouth, Devon