ASA Adjudication on Paragon Associates (Wills) Ltd

Ad

A radio and regional press ad for Paragon Associates:

a. The radio ad stated "If only. If only Mum and Dad had protected their estate. Now, with Dad gone and the likelihood of Mum going into care, not only could their house go to pay for it, but when she dies there will be a 40% inheritance tax bill, all taken from what they wanted to go to the grandchildren. Sadly, this is all too common for many people. A lack of careful estate planning may result in thousands of properties being taken by local authorities every year to pay for care and the Chancellor's coffers being swelled by billions in inheritance tax levies. Paragon Associates specialise in careful estate planning, trusts and wills, offering advice on how to help you minimise these liabilities …".

b. The press ad stated "Have you considered the implications of: INHERITANCE TAX If your estate is worth more than £300,000 (Inc. Property, Savings, Cash in Banks, investments etc) Then your beneficiaries could lose 40% Of their inheritance to the government For more information on how to avoid, reduce and mitigate this substantial liability please contact:- PARAGON ASSOCIATES (WILLS) LTD …".

Issue

1.  Two complainants, one who heard ad (a) and the other who noticed ad (b), believed the implication that inheritance tax would be charged at 40% on the full value of an estate was misleading.  They understood that inheritance tax was levied only on the value of an estate over the tax threshold; and

2.  one of the two complainants challenged whether ad (a) used an undue appeal to fear to promote the services offered by Paragon Associates.

CAP Code (Edition 11)

BCAP Radio Code

Response

1.  Paragon Associates (Paragon) explained that ad (a) had been approved prior to broadcast by the Radio Advertising Clearance Centre (RACC).  They said no concerns were raised at the approval stage about the ad being misleading.  They argued that the message conveyed in ad (a) was accurate and relevant and said they could supply details of many listeners who had benefited from estate planning advice resulting in the future security of their estates on behalf of their beneficiaries.

Paragon explained that ad (b) was aimed at those with estates valued in excess of £300,000, because that was the current nil rate band; 40% inheritance tax was levied on assets in excess of that figure.  They did not dispute the existence of a tax-free allowance, which was the reason why the ad mentioned the specific figure of £300,000.  They pointed out that details would be clearly confirmed and defined to recipients of Paragon's Clients Information Pack.  They submitted a copy of the pack for the ASA's attention.  

Paragon pointed out that they were not contacted by anyone with an estate lower in value than £300,000, because the issue was not relevant to them.  They suggested including the text "the current nil band rate" in future, similar non-broadcast ads to clarify the threshold status.  

The RACC said the information given in ad (a) was accurate; it stated "... there will be a 40% inheritance tax bill ...", but did not state that 40% of an entire estate would be liable for tax.  They argued that ad (a) used a fictional but representative scenario, which was applicable to many listeners, but which did not suggest that inheritance tax would be applicable to all estates.

2.  Paragon said no concerns had been raised at the approval stage about ad (a) being scaremongering.

The RACC said the ad did not constitute an appeal to fear, because the risk of losing a considerable proportion of an estate was entirely genuine.  They believed the facts were not stated in the ad in an alarming manner.      

Assessment

1.  Upheld

The ASA noted the comments of Paragon and the RACC and understood that the creative scenario in ad (a) was representative of only one example of how inheritance tax could be applicable following death.  We also noted the booklet distributed by Paragon included a section on inheritance tax, which explained the implications of the £300,000 threshold.

We considered, however, that the overall impression given by ad (a) was that 40% inheritance tax would apply to the value of all of the estate for all those who found themselves in the position given in the example.  We understood that a threshold value applied, which was currently £300,000, and that inheritance tax was liable only on any estate value above that figure.  In an ad that focused specifically on the implications of inheritance tax and encouraged listeners to contact Paragon for their service, we considered that the threshold figure and the fact that 40% inheritance tax applied only to amounts above the threshold were important qualifications that should have been made clear.

We noted ad (b) referred specifically to the threshold estate value of £300,000, but considered that it was not clear that inheritance tax was liable only on sums above that value.  We considered that readers could infer from it that 40% tax liability was payable on the full amount of a £300,000 estate and the ad could, therefore, mislead.  We appreciated Paragon's suggestion to amend the ad but considered that including the text "the current nil band rate" was unlikely to go far enough, because it did not make clear that inheritance tax was levied only on the value of an estate above the tax threshold.  We advised them to seek guidance from the CAP Copy Advice team before amending the ad.  

On this point, ad (a) breached CAP (Broadcast) Radio Advertising Standards Code section 2 rule 3 (Misleadingness) and ad (b) breached CAP Code clause 7.1 (Truthfulness).

2.  Not upheld

Although we appreciated that the scenario given in ad (a) was sensitive, we considered that Paragon had used a feasible example of circumstances in which inheritance tax would be applicable.       

We recognised that losing a proportion of an estate to inheritance tax was a genuine possibility for some people and considered that the approach used in the ad did not appeal unduly to fear to promote the services of Paragon.       

On this point, we investigated ad (a) under CAP (Broadcast) Radio Advertising Standards Code section 2 rule 16 (Superstition and appeals to fear) but did not find it in breach.

Action

We told Paragon to amend their future ads to make clear that inheritance tax would be payable only on any estate value over the tax threshold.

Adjudication of the ASA Council (Broadcast)

Adjudication of the ASA Council (Non-broadcast)