A mortgage network has been given VAT exemption on member charges as it says it can prove that its services are integral to the adviser client relationship.
In an email seen by Money Marketing, Customs and Excise has granted Classic Network Solutions exemption from VAT following assessment.
The 15-RI group set itself up as a packager last year and launched its network proposition on June 1.
AMI director Chris Cummings says the move bodes well for the sector and could provide some indication of the way Customs intends to treat mortgage networks in the future.
Classic describes its function as “a go-between” for members. It claims a direct relationship as an intermediary between clients and the adviser through completing applications, verifying and checking compliance procedures and taking responsibility for complaints.
Cummings says Customs has indicated that if it does seek to apply any VAT ruling retrospectively, it would backdate it from the date that a network got its last assessment.
But tax experts such as Financial Services Planning Consultancy consultant Graham Miller warn that a ruling from Customs is not set in stone and if it feels it has not got sufficient information at any point from a business, the situation can be reviewed.
Classic Network Solutions managing director Tony Corrigan says: “I am a great bel-iever in being proactive rather than reactive. I do not want to wait for someone to make a decision for me. We do not have direct contact with the client but we do facilitate that opportunity.”
Cummings says: “Discussions with Customs are progressing well but there is a long way to go and a new policy ruling could change things in a flash.”