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Excise in summit talks to decide network VAT

HM Customs and Excise is holding crisis talks with the Treasury, the FSA and senior financial industry figures to hammer out its policy on the Vat treatment of network member charges.

The summit meeting follows a move from Customs to force one small network to pay Vat on its member charges.

Following an appeal, the network directors have been assured by Customs and Excise that their business has not been singled out for scrutiny and the rest of the industry should expect similar investigation in the near future.

Despite fears that the ruling would be applied up to three years retrospectively, the network has been told it will be applied contemporaneously.

Support services providers such as Bankhall look set to escape the ruling but IFA, mortgage and general insurance networks could all be hit with tougher Vat requirements.

Tax experts believe that the few product providers which still have direct salesforces, such as Legal & General, Zurich Advice Network and St James&#39s Place, could also be subject to scrutiny.

Industry trade bodies believe that any attempt to backdate Vat or impose fines could have dire consequences for the sector, costing networks millions. They fear that individual network members may end up footing the Vat bill, which, in addition to regulation and PI insurance costs, could see many leave the industry.

A Customs and Excise spokeswoman says: “Customs at present are liaising with interested stakeholders and discussions and meetings will be held over the next few months. Customs are bound by taxpayer confidentiality and are unable to discuss matters regarding any specific taxpayers and their tax affairs.”

Syndaxi Financial Planning director Robert Reid says: “If the Treasury feels that it has lost any revenue it will be keen to bring this issue to an early conclusion. This needs to be part of a strategy to look at the whole issue of Vat for IFAs.”

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