<b>Opinion:</b> How Gordon upset everybody. By Simon Sweetman

Quite an achievement, really. The chancellor has managed to upset both accountants and solicitors in a single budget with two items that the national press more or less completely overlooked.

Continued...

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Comments

Hmmmm

Paulsoper | | Permalink

Quote: "I have never understood why accumulation and maintenance trusts should have a special privileged status anyway."

Lets put it this way shall we - A wants to give assets to his children in his will but is worried that he will die when they are too young so he sets up a trust which will hold the assets until they are old enough to enjoy the assets properly and in the mean time the income can be used, if needed to support the children, pay school fees etc.

The capital passing into the settlement is treated as any other and is taxed to IHT in full at that time. If the children were, say, 30 they have the m oney immediately with no further tax to pay. As the children aren't and the money must be held for them until they are old enough to use it sensibly Gordon now proposes to tax them once every 10 years in addition and an exit charge when the assets pass to them. He proposes an exception if they get in quick and change the age of absolute inheritance to 18 - but how sensible is that?

B decides to do the same but hasn't died yet - again if the kids were 30 he could give it to them immediately but they aren't so again he uses and A&M settlement because of the flexibility it offers. If he gave it to them immediately it would be a PET, and if he lives for 7 years tax free. Creating a lifetime A&M settlement was also a PET with the same consequences. Now he will have to pay a heavy price to set up a perfectly sensible device.

This is simply a wealth tax on trusts, creating additional liabilities rather than simply leaving a status quo situation. No comment, no justification, no reasoning (and no reason) - I don't think the revenue or Gordon (although I am sure he had little to do with this other than as a gesture, he'd probably been reading Dennis Healey's autobiography and decided to see if he could queeze the rich until he made the pips squeak!) have thought this one through at all.

Other than that all the comments made here and well made and deserve to be applauded!

Nice theory!

Anonymous | | Permalink

"When Mr Byte the computer consultant comes in for the first time, you just have to tell him that you expect him to get his books to you within a month of his year end and he won't know any different."

This is nice in theory - if only it actually worked! There is a big assumption that accountants don't already do this - believe it or not I don't actually like being under the pressures that I am in January and DO tell all clients this already!

change of timing

AnonymousUser | | Permalink

Bring forward the date of filing and "hey presto" an upsurge in estimated figures to avoid penalties.
I think Gordon has realised that he will never become PM so get ready for some more upset.