New High Court Ruling On Pension Pots

The High Court has recently ruled that untouched private pension pots of undischarged bankrupts can be used to pay off creditors.

Bernard Livesey QC judged that pensions of bankrupts yet to be accessed should no longer be off limit to a Trustee in Bankruptcy.

“Why should it be that a person who elected on the day proceeding his bankruptcy should be in a position where his entitlement to enjoy the fruits of his pension is liable to be subject to right of the trustee to apply for it to go to his creditors … whereas the person who had not yet done so is immune from the impact of the section and can enjoy the full fruits of his pension to the detriment of his creditors?”.

This case follows a Trustee who brought an application to force an undischarged bankrupt to draw his pension which he was eligible to do.

This judgement, which is subject to appeal, may have some far reaching consequences. We need to bear in mind that we need entrepreneurs to get this country bank on its feet. Many of these people will be sole traders and may not have been particularly well advised before they start out. The difference between such a person and one who take limited liability protection can have a massive effect if the business fails. For a great many, by the time they have decided to take the leap to set up their own business, they have accumulated a pension pot from previous employers. Why should they have to release this at a later date having fuelled the economy for a number of years in order the send the majority of this cash back to the creditors?

The whole question of risk and benefit needs to be taken into account when framing the law in this area.

I suspect there will be much more on this particular subject…

written by Tim Corfield

http://straightalkdebt.com/

EU TO RAISE CAPITAL RESERVE RATIO FOR BANKS

Europe’s biggest banks could see the amount of capital they are required to hold in reserve more than double. Current plans due to be fully implemented within the next seven years could require banks to hold a minimum of 7% of core capital to act as a buffer against potential losses. However, the EU is now considering requiring the banks to have as much as 17% in reserve in an attempt to avoid another Lehman style bank collapse. The Treasury is preparing a White Paper on new capital rules for UK banks that is expected to be published soon. It will pave the way for putting into law the recommendations of the Independent Commission on Banking for restructuring the UK banking industry. Under the rules, British retail banking businesses would be required to maintain a minimum core capital ratio of 10%, to ensure that retail deposits are not put at risk in a future crisis. http://straightalkdebt.com/

OSBOURNE TO CUT CORPORATION TAX TO 20%?

George Osborne has recently been reported that his objective is to reduce corporation tax to 20% which is significantly lower than other Western economies and would be great for UK business.

Hopefully, we will hear more of this in the budget later today.

George Osborne inherited a rate of 28% from the last Government and plans to reduce it to 23% in the lifetime of this Parliament.

A further planned reduction would be a good move and would attract business to the UK.

What about the UK’s competitors? The USA has a basic rate of 35% and France over 33%. Germany has a rate of 15% but there are additional social taxes which bumps this up to a rate in excess of 30%. Conversely, Ireland which attracts many multinationals has a much lower rate of 12.5%.

P35 (PAYE) Deadline 19 May: Comment from Frances Coulson, President of insolvency trade body R3

“Typically many businesses will be caught out by the P35 deadline on 19 May, having been ‘getting by’ and not submitting the full amount of PAYE they owe each month. This deadline is traditionally a time when HMRC uncovers any shortcomings in the payments due and the payments made in terms of PAYE, as well as those businesses which do not file at all.

“I suspect this will lead to an increase in actions by HMRC in a couple of months time, as well as pushing up corporate insolvency numbers towards the end of the year.

“One in four (24%) businesses are concerned about their debts, according to the R3’s latest Business Distress Index. Of this group, 37% are worried about Crown debts and this deadline will be a test for them. Seeking professional advice as soon as possible is the best way to allay those fears.”

Frances Coulson, R3 President

Methodology note on R3’s Business Distress Index: BDRC Continental conducted 501 telephone interviews with small, medium and large business owners and Financial Directors between 7th and 18th March 2011. Quotas are set by size, region and sector and the data weighted to the profile of GB businesses. The respondent in each case is a senior financial decision maker. Small businesses are those with a turnover of £50,000 to £1million pa.

R3 is the trade body for Insolvency Professionals, representing 97% of the UK’s Insolvency Practitioners.