Revenue slams FSA in split on platform role
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HM Revenue & Customs has criticised the FSA for defining platforms as providing administration services and sparking fears over VAT liability, as it says that platforms are clearly based on charging for transactions.
In its platform discussion paper in November, the FSA categorised platforms as providing a service based on admin rather than distribution. Ernst &Young raised concerns in February this could mean VAT would be applicable to platform fees and rebates.
At a discussion forum held by the Tax Incentivised Savings Association in London last week, HMRC deductions and financial services team senior policy adviser David Coppins said: “I do not think the FSA has been particularly helpful on this. The FSA had a very bland description of what a wrap platform was and all it talked about was viewing them as providing the administration of securities and a person’s assets.
“That is not the way we ended up seeing what wrap platforms actually do because most of the ones we have seen actually charge for transacting.”
Coppins argued the purpose of some platforms is to make it simpler for the client to manage their portfolios themselves. He added: “If that is the case, then that is a very direct relationship and if all clients that are being charged is the purchase of shares, for example, with the platform taking x as a percentage, then that is clearly a charge for a transaction. You cannot get away from that and we would not want to dress it up as anything else.”
Avalon director Harry Kerr says: “HMRC seems satisfied VAT will not apply to platforms. The FSA does not seem to understand what kind of service platforms provide. This is probably why the cash rebate issue has come up.”
The FSA refused to comment.
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Readers' comments (16)
Anthony | 24 Jun 2011 9:39 am
What are the FSA doing???? Clients mange their own assets, holy hocks! Our WRAP is to consolidate, new contracts, legacy contracts, and any future contracts on one manageable platform with client access for valuations and overview only. Our clients both purchase through their WRAP account and the wider market... AND IT IS ALL TRANACTIONAL.. Do your research Hector!!!
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jean mckeown | 24 Jun 2011 9:41 am
Print off!
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Patrick Schan | 24 Jun 2011 9:41 am
Can't get anything right can they?
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Sophie Sprigglet | 24 Jun 2011 9:42 am
Who'd of thought it, the FSA dont seem to understand the business they regulate!!! So now not only do IFA's, Providers, networks etc know they are a waste of space but the revenue as well. Perhaps this might feed back to the decision makers in Westminster.
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Glen McKeown | 24 Jun 2011 9:54 am
It does say something about the competence of the FSA when HMRC imply that the FSA does not understand the functioning of widely used financial facilities.
How can regulation be appropriate when the FSA do not "know their client".
When will Parliament wake up to the fact that the FSA is now just a bloated bureaucracy, providing rulings by assumptions not facts. It is unlikely that its successor will be any better. The first few pages of the latest edition of A New Approach do not give any hope that the Government understand why the present regulatory structure is a disaster.
We are now ruled by pre-conception at all levels because the professional politicians are too self absorbed to understand what is happening in the outside world.
There is a good argument for having a minimum age for MPs, say 45, so we know they have some understanding of the outside world. A similar restriction on Regulators may not be such a bad idea.
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Anonymous | 24 Jun 2011 10:00 am
If HMRC are prepared to say the above in public, what are they saying in private.
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Swanny | 24 Jun 2011 10:01 am
The FSA does not seem to understand ..........
How right you are.
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M J Winfield | 24 Jun 2011 10:02 am
Be careful, be very careful. The Government poor demented soles gave the FSA the authority to make Law, without reference to Parliament.
Does this authority encompasse, the total abolition of Parliament?
But not to worry the FSA only employ the best people.
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Simon Mansell | 24 Jun 2011 10:17 am
18 months before the FSA goes live with RDR we have more evidence the the FSA is not fit for purpose. Now we have HM Revenue & Customs telling the FSA what a platforms is! Maybe someone could tell the FSA what an IFA is and what he or she does.
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DH | 24 Jun 2011 11:22 am
I am not surprised and totally agree with Annon above "what must HMRC be saying behing closed doors"
There is still one thing nagging me !! we know the government will say "look this is why we have split up the FSA and made our own regulaters" but will they understand these will be the same halfwits we had already.
They need to be sacked and sacked now and save a load of revenue that continues to be wasted.
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