HMRC urged to provide clarity on VAT notes
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HM Revenue & Customs has been urged to provide a set of clear, definitive VAT notes setting out when financial advice is liable for VAT.
The Association of British Insurers and HMRC jointly published guidance last August, explaining that VAT is payable on advice but not on product sales.
But Syndaxi Chartered Financial Planners managing director Robert Reid argues that technical tax notes rather than guidance is what is needed.
Speaking at a Money Marketing round table on adviser-charging last week, Reid said: “We need a set of VAT notes, and I do not mean guidance from the trade bodies. We saw with the ABI and the HMRC that they could not agree between themselves what was said at the meeting. All we really need is a set of VAT notes like the kind that you would get for any other industry.”
Tax Incentivised Savings Association director of policy Malcolm Small said HMRC has noted the FSA’s classification of platforms as an administration service in its November discussion paper and is questioning whether platforms should be paying VAT.
Small added that HMRC was looking at whether Isa managers and Sipp and pension administrators should also be charged VAT.
He said: “I would like to say that we can put the genie back in the bottle over VAT but I do not think we can.”
Even among the attendees at the round table, agreement could not be reached about whether a platform was subject to VAT or not.
Fidelity International head of UK fund partners Ed Dymott said Fidelity will not be subject to VAT but Reid said he knew of two platforms that had been informed by HMRC they were liable for VAT.
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