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Excise steps up VAT review

HM Customs and Excise has contacted several more IFA networks to discuss their situation as part of its review of the way IFAs pay VAT.

As revealed in Money Marketing last week, networks are not being singled out for special treatment. Instead they are being contacted individually as part of a national review of IFA operations.

Customs has confirmed that it intends to apply any ruling to the trade nationally and as far as possible contemporaneously.

It remains unclear whether any move to change VAT on member fees would extend beyond IFA, mortgage and general insurance networks to support services providers.

The FSA, Treasury officials and the Customs policy team are holding talks to discuss the VAT treatment of IFA operations.

Customs says rulings have been sent to a small number of IFA networks based on particular sets of circumstances and that these rulings are being reviewed and discussed.

A Customs and Excise spokesman says: “We are aware that not all networks have structured their fee income in this manner and some already account for VAT on these fees.

“If it becomes clear that the decisions have wider application, we will, of course, ensure that this is communicated to the sector. However, at this stage, we are still rev-iewing the rulings.”

Lighthouse Group chairman David Hickey says: “I would find it surprising if Customs were to change their view on the way networks have been run for many years over-night. I believe if this was done, it would have to be applied across the sector simultaneously to every company.”

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