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Franchise is given go-ahead for VAT-free fees

A Leeds-based IFA franchise says it has received a concession from Customs & Excise allowing it to charge clients fees without having to hit them with VAT.

True Financial Planning says its advice process has been approved by the Finance Unit of Expertise within C&E. It means that as long as advisers adhere specifically to its guidelines, VAT is not applicable.

The process is not completely free of VAT if the adviser decides not to recommend a product purchase, when the fee charged is still VAT-able.

But if a recommendation to invest is made – and even if the client decides not to follow the advice – then C&E has told True that any fee charged will not incur VAT.

Throughout the process, three separate invoices are given to the client. The first two, while normally VAT-able, see tax deferred until the third invoice is handed over and the process is finished.

True has four firms and 20 RIs under its umbrella using its process and is looking to grow that number substantially.

Aifa is familiar with the True situation, saying it managed to convince C&E to issue guidance to IFAs in February outlining when their services incur VAT.

The guidance note says that as long as a product is purchased and the IFA&#39s involvement is more to do with its sale rather than giving advice, VAT is not charged on fees.

True director Giles Pidcock says: “The concession we have won is that our invoices are not VAT-able unless they subsequently prove to be VAT-able but this only works if people adhere strictly to our process.”


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