Last week’s front page news that HMRC is planning to expand its guidance on the VAT treatment of the platform charges could be an unwelcome spanner in the works of a sector which is already burdened with a load of regulatory stuff to deal with.
At this time there is scant detail and any discussions may come to nothing but even the investigative stage is likely to create a new workload.
Quite what form any changes might take is unclear but it has been reported that they might relate only to fixed cost platform charges. If my market recollections are correct there are already some instances where platform clients pay tax in this way and I maybe this whole episode will force some platforms to revisit the structure of their arrangements?
If any changes (or clarifications) are issued and create a negative outcome, one can only hope that platforms will not be put at a competitive disadvantage to legacy life products or the various models operated by discretionary fund managers or stockbrokers.
There are so many better outcomes emerging as clients are increasingly being migrated away from product-led models into service-led advice it would be a terrible blow to progress if the sector were to be hit with a new tax. One would hope that our various regulatory bodies are able to see the bigger picture and recognise that the kind of behaviour being exhibited in the financial planning and platform sector might just hold the key to a whole new level of customer engagement.
This is a massive prize, but should also be a key objective of any regulatory system faced with the impending doom associated with decades of under-savings and an ageing population.
Retail financial services needs to become more, not less, accessible and hitting clients with a additional charge seems only a barrier to that.
Let’s hope that those who have been engaged in discussions are able to convince HMRC that a vibrant and successful retail financial services sector is an essential part of our country’s future fabric and that the long term benefit of resisting intervention will be worth far more to the taxman than a change along the lines under discussion.
If there is requirement to achieve greater tax revenues from retail financial services there are surely more worthy ‘targets’ – after all, at a time when the much less competitive asset management sector has been granted a substantial stamp duty boost it seems odd to target a sector which has largely taken on the task of delivering the infrastructure to enable the implementation of the RDR.
Pretty much since inception the platform sector has been an extraordinary agent for positive change. This has become more pronounced as the industry has traversed into its post-RDR state, largely powered by platforms which are enabling ever greater levels of transparency, automation and cost efficiency. There is a brilliantly positive platform-powered new dawn emerging. At a time when trust and accountability have never mattered more, it seems an odd moment to penalise the good guys.
David Ferguson is chief executive at Nucleus