The definition of a platform has ben changed following concerns that defining it as an administration service provider would incur VAT liabilities.
In its November discussion paper, the FSA categorised platforms as providing a service based on admin rather than distribution. In February, Ernst &Young raised concerns that this could mean VAT would be applicable to platform fees and rebates.
In June, Money Marketing revealed HM Revenue and Customs’ concern about the definition. HMRC senior policy adviser David Coppins said: “The FSA had a very bland description of what a wrap platform was and all it talked about was viewing them as providing the administration of securities and a person’s assets.”
The FSA has now amended its definition to a service which involves “arranging and safeguarding and administering assets and distributes retail investment products which are offered to retail clients by more than one product provider; but is neither solely paid for by adviser charges, nor ancillary to the activity of managing investments for the retail client”.
Avalon director Harry Kerr says: “The FSA still does not seem to understand what platform services do. I still see myself as a product provider. At least the new definition does not throw up any VAT complications.”