Armstrong Neal Financial Sol-icitors is questioning the legality of the
extra charges for the FSAVC review levied by networks on their members.
The review is likely to cost networks millions, some of which will be
passed on to mem-bers. Under many networks' contracts, members are
protected against costs incurred if those costs are classified as damages
but the law firm fears some networks could classify the review as a Vatable
service, with members footing the bill.
ANFS says if a network classes review charges as “damages”, these would be
covered by standard indemnity clauses but if the network classifies the
review as related to a service which is Vatable, members would have to pay.
Partner Gareth Fatchett says: “The likelihood of a challenge is high as
many contracts protect against damages. They do not provide for services
which are then recharged, meaning the lawfulness of the FSAVC charges is
But IFA Professional Services chief executive and director of M&E holding
company Tenet Group Geoffrey Clarkson says: “The VAT issue is a bit of a
red herring. In the same way as pension review charges, the issue is
contractual and allows for event-specific charges.”