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Four charts that highlight the LTA planning problem

Advisers who play it safe could miss planning opportunities, but those who don't could face disgruntled clients in future.

When surveyed during the 2018 Curtis Banks Group Roadshow, ‘Sipps for modern retirement’, most advisers said there is not a clear enough distinction between tax planning and tax avoidance.

However, when asked about grey areas within pension rules that aim to reduce a lifetime allowance charge, the majority also classed such activities as planning rather than avoidance.

Even if these activities are not classed as avoidance today, it does not mean they will be seen that way in the future. When we wrote to HM Revenue & Customs (HMRC) to ask for its view on delaying or splitting death benefits, it said it would not answer hypothetical questions. This gives no indication of whether there is a risk of these activities being viewed as avoidance.

This leaves advisers in a very difficult position. The lifetime allowance affects more people now than ever before.

Advisers will understandably want to find ways to reduce or eliminate lifetime allowance excess charges for their clients as part of their retirement planning.

However, without clear guidance there is no way to know whether or not to act on potential opportunities such as these.

If HMRC does not give clearer guidance, any adviser who decided to play it safe could be accused of missing tax planning opportunities for their clients. On the other hand, if HMRC did later decide to retrospectively class such activities as avoidance, advisers who did take part could also face disgruntled clients.

Jess list is pension technical manager at Curtis Banks

When surveyed during the 2018 Curtis Banks Group Roadshow, ‘Sipps for modern retirement’, most advisers said there is not a clear enough distinction between tax planning and tax avoidance.

However, when asked about grey areas within pension rules that aim to reduce a lifetime allowance charge, the majority also classed such activities as planning rather than avoidance.

Even if these activities are not classed as avoidance today, it does not mean they will be seen that way in the future. When we wrote to HM Revenue & Customs (HMRC) to ask for its view on delaying or splitting death benefits, it said it would not answer hypothetical questions. This gives no indication of whether there is a risk of these activities being viewed as avoidance.

This leaves advisers in a very difficult position. The lifetime allowance affects more people now than ever before.

Advisers will understandably want to find ways to reduce or eliminate lifetime allowance excess charges for their clients as part of their retirement planning.

However, without clear guidance there is no way to know whether or not to act on potential opportunities such as these.

If HMRC does not give clearer guidance, any adviser who decided to play it safe could be accused of missing tax planning opportunities for their clients. On the other hand, if HMRC did later decide to retrospectively class such activities as avoidance, advisers who did take part could also face disgruntled clients.

Jess list is pension technical manager at Curtis Banks

When does tax planning become tax avoidance?

Source: Curtis Banks Group survey of advisers

When does tax planning become tax avoidance?

Source: Curtis Banks Group survey of advisers

When does tax planning become tax avoidance?

Source: Curtis Banks Group survey of advisers

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