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HMRC stance on VAT could prompt fee overhaul for DFMs

Discretionary managers Whitechurch Securities and Equilibrium Asset Management say they may need to overhaul their fee structure if HM Revenue & Customs revises its stance on VAT on discretionary management services.

Last week, the European Court of Justice recommended all elements of discretionary management services, including dealing fees and commission which are currently exempt, should be subject to VAT.

This could see HMRC reassess its VAT treatment of DFM services.

Whitechurch Securities managing director Gavin Haynes says: “We have to wait until HMRC decides to interpret the ruling in terms of whether they decide to make sweeping changes. We will have to review the structure of our fees and fee levels if VAT is charged on the whole process.”

“We have a custodian charge which is for holding the client assets which is not VAT-able and a management charge which does attract VAT.
“We also have a switch fee of £12.50, which is a flat fee, and this does not currently attract VAT.”

Equilibrium Asset Management offers financial planning and discretionary management and currently charges a bundled fee for the service.
Investment manager Mike Deverell says: “Most of the time, this fee does not incur VAT because usually there is advice and a sale of a product. We may have to unbundle the charges if HMRC charges VAT on the whole process.

“If it turns out that we have to charge VAT on the discretionary management service and another firm is running investments on an advisory basis and is not being charged, it seems a bit unfair.”


Hanley Economic chief Webster becomes BSA chairman

The Building Societies Association has appointed Hanley Economic Building Society chief executive David Webster as chairman for the next year. Webster replaces Principality Building Society chief executive Peter Griffiths, who has held the position for a year. Webster has been chief executive of Hanley since April 2002. In 2007, he joined the BSA council and […]

Deficit figure for defined-benefit plans surges to £10bn

Companies running defined-benefit pension schemes saw their combined deficits balloon by more than £10bn in April. Pension Protection Fund analysis shows the combined deficits of the 6,432 DB schemes potentially eligible for entry into the lifeboat scheme rose from £206.2bn at the end of March to £216.8bn at the end of April. The April 2012 […]


F&C mulls fund launches in D2C push

F&C Asset Management is considering the launch of further investment trusts and expanding its current direct-to-consumer offering, as part of its ongoing consumer review. The asset manager has outlined a new consumer strategy based on profitable growth, driven by consumer needs and building on the group’s current strengths. The firm believes it is well-positioned for […]


Labour demands answers over costs of new regulator’s HQ

Shadow Treasury financial secretary Chris Leslie is pressing the Government to reveal the cost of the Prudential Regulation Authority’s new headquarters in Moorgate. Last month, the Bank of England announced it has signed a contract for 20 Moorgate until 2027. The Bank said it will be more expensive to move from the FSA’s Canary Wharf […]

Europe: banking on a recovery

Neptune video: Europe — banking on a recovery

Arguing that the eurozone crisis is over, watch Rob Burnett, head of European equities at Neptune, discuss the sectors that he’s investing in to harness the recovery. 

In the video, Burnett addresses the following: 

• The primary drivers of the eurozone’s economic recovery
• The turnaround in individual countries’ current accounts
• Sectors best positioned to harness the recovery, without offering undue exposure to risk


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