Standard Life commissions an annual Wills and Trusts Research report, which provides evidence of consumer sentiment on a number of estate planning issues. In terms of the impact of the banking crisis, one of the aspects which is clear from the most recent report is the way that a number of people are accelerating wealth transfer now, rather than waiting to do so in their Will.
Who do clients turn to for estate planning advice?
Comparing the results of the 2008 report with the 2009 report, a stark contrast exists when it comes to looking at who clients think of turning to for estate planning advice.
As before, solicitors come out in front as the most popular source of estate planning advice, although down three points from 2008. Accountants are well down the list, and indeed have been overtaken by other sources in 2009. The key findings in the most recent report show that those looking to use the internet to research estate planning matters jumped up from 47 per cent to 54 per cent.
New legislative threats
One significant new threat is draft legislation which seeks to create new deterrents on steps which people might take to pay less tax. The so-called “Working with Tax Agents” paper published in February with draft legislation sets out a framework which will allow financial penalties to be imposed on advisers who are guilty of “deliberate wrongdoing”.
The published draft may yet go through with amendments, but as worded is transformational in its scope in terms of how advisers could be targeted by HMRC. The consultation was due to close on 3 March, although it is hoped that the deadline will be extended given the problems which have been identified in discussions to date.
Deliberate wrongdoing
The issue for financial planners in terms of the scope of the draft legislation is that “deliberate wrongdoing” is almost a strict liability offence. If an adviser gives advice which directly or indirectly leads to a loss of tax, and that was a deliberate piece of advice, then even if a loss of tax does not actually arise, the adviser could be guilty of “deliberate wrongdoing” and subject to the penalty framework in the document.
The muddying of the waters between tax evasion and tax mitigation is in evidence in this draft legislation, which (if unchanged) would radically alter the environment for those giving investment advice which involves certain taxation outcomes. The draft legislation is quite simply too wide in scope.
For the full report see April’s edition of International Adviser. To subscribe to the magazine click here. The e-edition will be available here on 6 April
