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Taxing taxes and pension puzzles: week in news

Taxing taxes and pension puzzles: week in news

Unlike staffers at the White House, the writers of the week in news don't benefit from anonymity, which means you know who to hold accountable.

In anticipation of your complaints, let's get under way: it's time for the week in news.

1) Advisers still have the DB-jeebies

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Just when you thought it was safe to go back into the defined benefit (DB) transfer market, it turns out advisers may not be taking enough precautions.

Former Financial Conduct Authority (FCA) technical specialist Rory Percival said file reviews were not enough to safeguard firms against backlash from DB transfers.

The comments came as he launched a guide on defined benefit (DB) transfers, where he addresses this issue, alongside suitability and new regulations coming into force in October.

Mr Percival told FTAdviser a lot of financial adviser firms worked on the basis that they did checks on all their files but he warned "in isolation, this is unlikely to be an adequate control for this high-risk business".

The flame obviously wasn't worth the candle for Mattioli Woods, which withdrew from the DB transfer advice market completely this week because transfer values had been declining and due to regulatory concerns.

2) Making allowance for HMRC

Tax can be complicated, so it's understandable to be a bit confused every now and then.

But confusion about tax isn't something we would often expect from HM Revenue & Customs, which this week revealed it does not have the data on how much tax is collected through the money purchase annual allowance.

This has meant the government has not been able to evaluate the effectiveness of its cuts to this allowance.

In response to a Freedom of Information request from Canada Life, HM Revenue & Customs (HMRC) revealed it does not hold information on the number of individuals who paid a tax charge as a result of breaching the MPAA, or the total value of tax collected through the MPAA charge each year.

The MPAA, introduced in 2015 to coincide with pension freedoms, is the amount a person who has already begun drawing on their pension can pay back into their retirement pot in a given year without incurring a tax charge.

3) Turning point for Woodford?

Neil Woodford has said the "stress" in emerging markets is proving his view of the world economy right.

Mr Woodford has been much more positive on the outlook for the UK economy than his peers, which has hit the performance of his Woodford Equity Income fund.

According to data from FEAnalytics, Woodford Equity Income has returned 1.4 per cent over the past three years, compared with the 31.5 per cent returned by the IA UK All Companies sector.

But Mr Woodford said the volatility seen in emerging markets recently was feeding into asset prices, which he expected to continue.

The fund manager said he had positioned the funds he manages for a steep slowdown in global growth, with the UK to be a "shining light".