Networks will have to work together to put their case to Customs and Excise on VAT or face being targeted individually, warns a leading tax expert.
Financial Services Planning Consultancy consultant Graham Miller believes it will be crucial for the IFA industry to show a united front to Customs through trade bodies so a definitive approach can be adopted for businesses and retrospective action avoided.
A move to force individual IFA networks to pay VAT on member charges has sparked a wider enquiry from Customs into the way all networks treat VAT.
Miller says that while Customs says its guidance has not changed, there are clearly differences in the way it is being interpreted.
He fears that the substantial liabilities assessments pending against a small number of networks are likely to have far-reaching cost implications for the entire industry.
Customs has indicated that it views the relation-ship between the provider and the client as a direct connection facilitated by the intermediary, not the network.
Distancing the network from the process could see a change in the way that commission is distributed, with the individual firm made responsible for reporting its commission income direct to Customs.
Miller says: “It is important that the industry presents a coherent and united lobby in order to ensure a level playing field and to gain a consistent and fair treatment across the networks.”