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BBB claims VAT bills will see IFAs quit networks

IFAs looking for more protection from VAT bills, escalating regulation and astronomic professional indemnity insurance will jump ship from networks to nationals, says Berkeley Berry Birch.

BBB chief executive (network division) Richard Howells believes the VAT issue could be the last straw for many small IFAs who could find their networks passing on the cost of unforeseen VAT bills and penalties to members.

Assuming that Customs & Excise goes ahead with measures to toughen up on when advisers and their networks pay VAT, Howells believes nationals will have a distinct advantage over networks.

He thinks administering VAT in the future will be easier for nationals, which will be able to implement a one-size-fits-all system faster and more efficiently than networks struggling to tailor changes for hundreds of individual businesses.

Howells believes many of the smaller networks will be unable to cope with VAT and could see an exodus of members if charges increase significantly. Although he believes it will be progressive, he thinks the next few years will see more abandoning their own businesses for easier alternatives that let them remain in the advice field.

But Syndaxi Financial Planning director Robert Reid does not believe a national structure lends itself more easily to administering VAT.

Reid says: “This is a complex area and inevitably nationals will run into just as many problems, particularly with VAT grouping. These could only be avoided if the company was not passing money between corporate entities.”

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