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Tisa in plea for VAT amnesty on advice

Tisa is calling on HM Revenue & Customs to offer a VAT amnesty on past advice business.

Tisa Distribution Advisory Council chair David Hazelton says the amnesty is necessary to make way for open discussions to address the uncertainty over how VAT will apply to the new adviser-charging regime.

He says: “We need to come together as an industry and participate in discussions to bring clarity to a pretty complicated subject. Once HMRC realise how adviser business models have changed, they will see how important a tax amnesty is. Retrospective VAT charges could break a business.”

Hazelton says a consultation involving Tisa, HMRC and other trade bodies is expected to start in May and will take between six and nine months to complete.

He says an amnesty should not apply to advisers who have been deliberately avoiding VAT on their advice charges until the RDR is implemented.

He says: “People who have fudged the issue by deliberately avoiding VAT when it was liable should be concerned.”

“If things look like they are VATable, then advisers should be charging it now, not waiting until after December 2012, the change in adviser business models has brought this about, not the RDR, that is where people are getting confused.”

Old Mill Financial Services partner Simon Cole says: “There is a lot of clarity needed around VAT and an amnesty of retrospective business would be a good way of bringing in the changes. It would be very draconian if HMRC start applying VAT to previous business which could have disastrous consequences for firms.”

Highclere Financial Services partner Alan Lakey says: “An amnesty would bring certainty but I would suggest HMRC would not grant an amnesty when they think they can recoup some costs.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Steven Farrall (Adviser Alliance) 28th April 2011 at 3:08 pm

    Just goes to prove what a bad tax VAT is. It depresses business and is – the case of IFA’s – a direct charge on client’s capital. That is taking savings and investment funds and spending them on state cashflow.

  2. For heaven’s sake, talk about cart before the horse! Would you not expect the issue of VAT and adviser-charging to have been sorted out long before now!

    Tell me how RDR will cut charges when the cost of advice goes up. The FSA has said it would “be surprised” if annual management charges were maintained at current levels and suggested competition could lower overall costs. In the FSA Disney world returns may look better but the overall costs will go up. My guess is that the FSA and Treasury have worked out that is product charge go down, then the returns on the fund go up driving more income into the hands of the tax office. Then out of taxed income pay the adviser and those charges will be charged VAT at 20 per cent.

    You could be forgiven for being cynical about RDR and thinking it was just an invention to increase tax revenue!

  3. Don’t see why there should be an amnesty. Surely those qualified to give advice are capable of understanding when VAT applies and when it doesn’t ?

  4. Mr Blackmore, if HMRC and our Chartered Accountants aren’t sure, how can you possibly expect us to be sure?

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