The FSA should put pressure on HM Revenue & Customs to produce a clear guide explaining when financial advice is liable for VAT, says The Ideas Lab director Roderic Rennison.
Speaking at the PIMS conference last week, Rennison said unless the regulator forces the issue with HMRC, uncertainties over when to charge VAT on advice will persist.
Rennison said: “The FSA must lean on HMRC to provide meaningful and definitive VAT guidance for the profession, by which I mean not just intermediaries but suppliers, life companies, fund management groups, platforms, software suppliers and, above all, distributor firms.”
He advised IFAs to speak to their tax adviser or accountant to clarify their position and to get any recommendations related to VAT-charging in writing.
Rennison added: “If you have not registered for VAT yet and plan to do so you should take advice on the manner in which you do that. Talk to your tax inspector, as firms seem to be facing the prospect of a retrospective VAT bill due to the suspicion that might arise around why a firm is registering for VAT now when they have not been registered before.”
Paladin Financial Services managing director Tim Purdon says: “This is an issue that should have been addressed by the FSA prior to the RDR or as part of the consultative process before telling IFAs they have to switch to a fee structure.”