Industry consultant Peter Williams says HM Revenue & Customs’ RDR VAT guidance is not in line with its own tax rules but overhauling VAT on adviser charging was not a priority for the Government.
HMRC finalised its RDR VAT guidance earlier this month, which confirms advice will be exempt from VAT where clients are looking for a retail investment product.
Speaking at a Money Marketing RDR invitational event in London last week, Williams said the guidance was positive for the industry but may not ultimately be in line with VAT rules.
Williams said: “My view is HMRC has not given correct guidance on VAT and the statements it has made are actually in breach of its own VAT regulations. That is because they are very generous.”
He said pressure from the FSA and fewer resources at HMRC has meant tackling VAT on advice has not been a priority.
Scottish Life business development manager Fiona Tait said:
“I suspect HMRC is waiting to see if everybody switches over to offering pure advice services after the RDR. If that happens, it will not need to make any further statements but it will end up collecting the tax.”