Platforms have reacted with scepticism to Hargreaves Lansdown’s decision to mount a legal challenge against HM Revenue and Customs’ taxation of platform rebates.
HMRC announced in March that rebates from unwrapped investments were liable to a tax charge because they qualify as annual payments and imposed the interpretation from 6 April.
Hargreaves has now launched a legal challenge over the decision, saying the company was told its rebates were not subject to tax because they were defined as a refund of charges. Hargreaves says it will withhold the 20 per cent income tax in an effort to force the issue.
But other platforms do not believe Hargreaves’ challenge will succeed.
Novia chief executive Bill Vasilieff said said: “This issue has been going on for about six months now. We do not think it will be successful and we will not be doing the same.”
Ascentric managing director Hugo Thorman says: “Frankly, most of the industry are now committed to clean share classes and if you move to clean share classes the whole issue goes away. By the time the Hargreaves case is finished all the platforms will be in clean share classes, so it will make little difference.”
AJ Bell has no plans to make a similar challenge to HMRC, though says if Hargreaves make a convincing case why rebates should not be taxed the platform industry will ultimately stand to benefit.
Some in the industry have told Money Marketing they feel the industry was fortunate to avoid retrospective taxation when the rules were introduced in April and that any revision of the HMRC decision is unlikely.
An HMRC spokesman says: “HMRC’s technical view was set out clearly in our briefing document published in March. For legal reasons we cannot comment further at this stage.”