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Skandia calls for CAR to be exempt from VAT

Customer agreed remuneration should be exempt from VAT, regardless of whether the adviser is paid a straight fee, a fee deduction or a commission from the product, says Skandia.

It adds that all tax inconsistencies must be removed if CAR is going to succeed and is urging the FSA to liaise with Government in order to provide clarity in this area.

Skandia says there is currently a danger that consumers could opt for a payment method that is not suitable for them simply because it has a more favourable VAT treatment.

Head of marketing Billy Mackay says: “There is a great deal of confusion and inconsistency in the way VAT is currently applied to payments being made for financial advice. In a period where simplification continues to be a common theme real benefits can be gained from simplifying the rules surrounding VAT and adviser remuneration.

“If this can be achieved by confirming that any form of CAR does not attract VAT, CAR can be a success. Getting it right can only further improve confidence and trust in the financial services sector.”

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