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Network members must unite against VAT on charges

Readers will have seen the Customs and Excise decision to start applying VAT to charges made to members of a network.

Can I implore anyone who is part of a network to contact their senior management and make it clear what your feelings are. This is a radical change and alters what is nearly 20 years of the network model.

Do not wait for your senior management to receive a letter from Customs and Excise. Once it is received, then you will have to pay VAT while they (hopefully) challenge the decision. You would be better off making enough noises so that your senior management challenge the matter beforehand.

There is a common misconception that any charge will only be made to any monthly fee you are paying. This is wrong. If you are paying, say, 15 per cent to your network by way of a deductible against commission received, then that too will have VAT applied.

On average, if you pay £10,000 to your network, then that now means you will pay an extra £150 a month in VAT. That is a lot to any small IFA in today&#39s market.

This decision is a hasty one and fails to recognise the appointed representative status of a network member, arguing that you are receiving and paying for a service rather than having a deduction from commission, which is, of course, non-VATable.

It will create a skewed market as a directly authorised IFA does not pay VAT on any of its commission but, equally, is not paying any VAT on the services it receives from its regulator, the FSA.

We have to approach this matter as a combined network alliance. I cannot stress enough how this decision by Customs and Excise has suddenly imposed a huge bill on what is already a pretty expensive industry.

Please start objecting now. We have one chance and one chance only.

Ian McIver

Managing director

Whitechurch Network,



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