The first Finance Act of 2010, imaginatively titled Finance Act 2010, can be downloaded here.  The third, and final, Act for 2010 will be issued later in the year.

So, as things stood, weathly scheme members would still continue to face the choices of annuity purchase, QROPing or ASPing, but before age 77 rather than age 75. For the very big majority, such choices would be irrelevant due to pension entitlements long since having been triggered to provide a capital and income in retirement.

But no more. With the issue this week of a consultation document on the topic, different and more far reaching proposals are now in the public domain. Responses to the consultation are to be submitted by 10 September.

The proposals being put forward are as follows:

• There will no longer be a requirement to purchase an annuity, whether at 75, 77, or any other age.

• The ASP regime will be abolished.

• Scheme members will be entitled, but not obliged, to drawdown an income from a scheme, within minimum and maximum parameters: the proposals in this regard are similar to those for SIPPS.

• The 25% income tax free lump sum entitlement will remain.

• The scheme value of a member who dies before age 75, and without having drawn benefits, will continue to be tax free.

• The scheme value of a member who dies when aged 75 plus, or at an earlier age when the scheme is in draw- down, will be subject to income tax. This recovery rate is proposed to be 55%.

• There will be no inheritance tax charged on the value of schemes.

Whilst it should be noted that these are only proposals, the changes, in whatever final form, are expected to take effect from April 2011.

What will, and will not, find its way into the draft legislation, due to be issued later this year, remains to be seen.  However, what will, to many, already be clear is that, whilst many of the sentiments expressed in the condoc are laudable when taken in isolation, the whole exercise is going to involve a huge amount of time and effort, further complicate a pensions system which the previous government managed both to introduce and trash in the space of only 5 short years, and stand to benefit only a very small number of pensioners.

And who will, in the main, make up that very small proportion ?  Those who have such a degree of wealth tthat they can use a pension as a tax favoured savings and estate planning vehicle because they will have sufficient means elsewhere not to have a need to draw on the pension as means of paying the bills. A cynic might suggest that is a small very wealthy group of people who might be  confused with those who the upper echelons of the new coalition government are so keen to cosy up to. ( Well, that, and a certain constituency who are too stupid to understand that their pensions are going to be too small to pay for the weekly grocery shop let alone represent a nest egg for their children.)

Whilst I would like to be proven wrong when it comes to the motivations behind these proposals, it is hard not to be sceptical, not when we have already put with up so much politically inspired bad law from the previous administration. 

But, if scepticsm is warranted, then, in practice, all these proposals will really mean is that a relatively small number of very wealthy people with old style uncapped pension schemes worth millions, if not tens of millions, are going to die with their schemes deliberately left untouched, and with their heirs getting a 33% cut (82% down to 55%) in the tax bill they would otherwise have suffered. For everyone else, with relatively low value schemes which will be drawn down or annuitised long before reaching age 75, the proposals will make scant difference.

Whatever, the shame here is that we are undoubtedly already facing a future pensions and savings crisis, with the great majority of those in the post baby-boomer generations facing an impoverished old age. The best the previous government could come up with is the idiocy of NEST. And, now, is this the best the new lot can manage ?  We can but hope there is more, to follow, that it is radical, and soon.    

Finance Bill here, Explanatory Notes here, and Lobby Notes here.

There is no sense in writing about the hard facts of the Budget announcements all of which are readily available elsewhere.  I shall, instead, see if I can take the opportunity to upset someone.

At the outset, and credit where it is due, Boy George has done better than I, for one, had expected, and has managed some consistency with earlier policy announcements. So far, so good, in that respect at least.  Regardless of whether you agree with the politics, there is a lot to be said to consistency and all the more so when the previous incumbents were prone to changing their minds as often as their socks.

In this regard, it is especially encouraging to see a continued commitment to better policy making and the formation of an Office of Tax Simplification. With the exception of a possible consideration of a  GANTIP (GAAR), which I consider to be utterly unworkable when added to the UK tax code in anything like its present form, it is difficult to find anything to complain about when it comes to the sentiment in Tax policy making: a new approach. Let us just hope this early positive showing is maintained and that the OTS is brought about sharpish. Others will have their own views, but I feel that the OTS will need to be chaired by a non partisan player of indisputed excellence and experience. I am unsure over his health but, if that permits, I would nominate Peter Millett as the man for the job.  Whilst Geoffrey Howe  would be  reliable, he would, as former Tory minister, suffer from an apparent lack of independence from his political masters.

Elsewhere, I am surprised at the extent in the increase in CGT, and its timing. I feel most of us could have lived with 25%, which has a sort of logic in some peoples’ eyes, but 28% is too high and is likely to have a detrimental effect both on behaviour and the tax take. The increase in the lifetime limit for entrepreneurs’ relief to £5M is welcome, but it is but a fig leaf measure.

The introduction of the rate change with immediate effect will be, to many, a big surprise when there is no precedent for a mid-year rate change. One cannot help but feel this government has fallen into the same trap as its predecessor and has legislating primarily for immediate political effect and, if so, that has to be disappointing. One cannot imagine HM Revenue & Customs are going to be impressed when it comes to their attempts to deal with the effects of the mid tax year change, although, as usual, doubtless HMRC will do their damndest to outsource most of the extra cost to the private sector.

On CGT, the law is the law etc., but away from the coalface I cannot help but be disappointed that there are no steps being taken to curtail the ludicrously anomalous attractions offered to the owners of private residences. It is apparent (BN28) that principal private residence relief was on someone’s list of possibles for review, but one can but presume that the Tory Boys bottled it. Either that or they were reluctant to offload the tax free second homes that we, the public, have paid for.

In an era when formal pensions savings will now have only very limited appeal, and with scant encouragement by the tax system for an individual to invest in the average SME, a tax system which, whether by accident or design, steers people towards residential property has to be undesirable. Why should anyone work 12 hours a day and stand to lose the majority of their earnings in tax when, instead, they could “do up” their bricks and mortar, turn and flip properties on a regular basis, pay no tax, and continue to bore at dinner parties ?  If ever there was an occasion to encourage endeavour over passive investment, this was surely the time.  Much as I will, as ever, advise clients of the laws available to them in this regard, I cannot help but wish I could be advising the same people on paying at least some CGT, with that tax being earmarked for tax breaks and other incentives aimed at encouraging the nation’s young to start businesses.

In the current economic climate, it is difficult to see the claimant and his fellow scheme members eliciting any sympathy by bleating about impending bankruptcy and stress etc.  Curiously, the efforts made in this regard only reduce any prospect of me feeling sorry for them and I very much doubt I am alone in wondering what medication the claimant’s counsel was taking when he thought it would be a good idea to run with that line. 

The very fact that any demands for financial clemency should follow a challenge to what was commonly regarded to be an entirely artificial arrangement, the success of which was utterly dependant on a narrow, literal construction of the law (which was rather optimistic, even in 2001), proves what I have consistently said over many years; mass marketed schemes are a bad idea. 

This is not because they may, or may not, carry a high risk of challenge but because that risk is heightened by the very fact the schemes are sold to the lazy or stupid who, in turn, need to be protected from themselves.  Such people fall for the saleman’s blather because it is what they want to hear, and they rarely stop to question the lack of independence of the people who are, in the loosest sense only, advising them.   Nor, of course, do they appreciate that one man’s counsel’s opinion is merely another man’s seriously overpriced toilet paper.   

Stand alongside loads of other stupid people and that’s one very big stupid target to be shot at.   If you are going to enter into high risk planning, then fine, so long as it is lawful, but at least reduce the size of the target to be shot at by going bespoke, get expert advice that is independent of a sales commission, rationalise the risks involved,  be they financial or otherwise and, vitally, consider making a tax reserve (and keeping it).   

Those scheme members now facing financial ruin might take some smidgeon of consolation in being those that were sacrified for the greater good of the public interest; being, hopefully, the long overdue demise of mass market tax scheme flogging.   To which end, one can but wonder why dodgy Dave Hartnett has yet to come out with one of his pub-bore announcements, proclaiming that Mr Huitson and his cohorts are tax evading criminal scum, or suchlike, and that they got everything they deserved, blah, blah, blah

Might it be that someone more politically astute than Dave Hartnett has decided that, in an election year, it might not be a good  idea to shout about a prima facie success which could, all too easily, backfire when presented in a certain light to the great unwashed ?

Whilst having only the skinniest of educations in public law, I nevertheless feel content that the appeal courts will uphold the decision.  At law, there is nothing which prohibits the enactment of retrospective tax legislation and the victimisation (if you like) of a relatively tiny number of the populace is never going to be held to be disproportionate to the legitimate aim of protecting the public purse.   

However, what works at law does not necessarily also work well in politics, and now is not a good time to go advertising  the well proven legislative shortcomings of the current government, nor the snide and incompetent manner in which its agency, HMRC, now routinely conducts itself.  

When reading the judgment with that in mind, one can see the potential for the decision to be spun as highlighting the incompetence of a government, and its agency, in failing to act timeously or efficiently  in  its supervision and making of law and, moreover, being content with penalising citizens (voters) when covering up its own inadequacies.   Certainty and prospection may be desirable in law making, but trust is an essential in politics when a general election is imminent.   

If I was an Opposition dirty tricks operator, I would use Huitson as the most superficial  of support for promulgating a rumour that the current government, if re-elected, will  introduce backdated income tax for everyone.   All merry hell would break loose for a few days and the damage would be done.   

The only people who would stop to look at the detail would be those familiar with the law concerned but, within such a community, and regardless of personal political stripe, I venture it would  be hard to find many who didn’t think the government long since had it coming.    

Earlier judgments: High Court here and Special Commissioners here.

Curiously, when the ICAEW were on notice that the Supreme Court was due to hear the PTA, a hunt around the ICAEW website shows that they were not deterred in scheduling another disciplinary hearing against Coke-Wallis for as recently as 9 December 2009.  Does that mean that the ICAEW saw it as beneath them to await on the Supreme Court to opine barely a week later ?  Or was it that the hearing was inadvertently scheduled  due to an administrative error, with the ICAEW  overlooking the mere detail that, for only the second time in its history, the ICAEW was facing a hearing before the highest court in the land ?  There is, as yet, no published record of  a disciplinary hearing actually taking place on 9 December, which lends support to the view that the listing was an error.  Notwithstanding, when the only explanations are arrogance  or incompetence, neither will play well when abuse of process is in point.

Having previously dealt with Coke-Wallis in his practising days, and being one of a good number of his professional contacts who were none too happy at the time with the seemingly disproportionate actions and attitiudes of the regulatory bodies, it is difficult not to conclude that, after a whopping 8 years and  still counting, the motivations of the ICAEW, in particular, never did have much to do with their offical remit. 

The substantive hearing by the Supreme Court should be before summer 2010.