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.”