Cofunds has taken down its capital gains tax calculator after advisers flagged up inaccuracies in its calculations.
The platform says some clients have complained about the way the Praemium-powered calculator worked out the reinvestment of dividends within accumulation units.
The calculator reinvested dividends into the gross cost of a fund rather than the base cost, meaning the client’s base cost was undervalued.
This means if a client was selling out of a fund, the dividend was shown as a gain on the gross cost, leading to possible capital gains tax inaccuracies.
One adviser, who does not want to be named, told Money Marketing the problem has persisted for around six months.
He says: “In some cases, this can lead to clients significantly understating the base cost of their investments and leading to too much tax being paid.”
Cofunds removed the tool last Friday after trying unsuccessfully to fix the calculator.
A Cofunds spokeswoman says: “We were aware of a couple of issues that have persisted over several months. We tried to fix these while keeping the tool live for those advisers for whom it was still working, however it became clear on Thursday that in order to remove the bug we would have to isolate it first. We took the tool down on Friday and we are working on it now.”
Cofunds says the tool is only used as a guide and only applies to the assets held on platform, so no clients have suffered losses.
The Lang Cat principal Mark Polson (pictured) says: “CGT tools are always problematic. CGT calculations are usually best done by a client’s accountant rather than relying on these kind of tools.”