Industry experts say Government plans to tackle firms which artificially split their services to avoid VAT will not affect advisers who split their business between VAT-able and non-VAT-able charges.
Earlier this week, Treasury exchequer secretary David Gauke gave details of new tax restrictions expected to boost Treasury coffers by around £5bn. It includes plans to “tackle businesses who artificially split the supply of services to cut VAT bills”.
Personal Finance Society chief executive Fay Goddard says splitting a firm’s “pure advice” service, which is subject to VAT, and financial intermediation, which is VATexempt, delivers greater tax transparency than bundling the two services together.
She says: “It gives more certainty about the VAT position to split your business into two pricing structures, one for advice and one for remuneration. The people who are not splitting out the cost of the advice, which could be the predominant service, and are bundling it with the intermediation label to make the whole thing exempt are more at risk.”
Tax Briefs editorial director Danby Bloch says: “HMRC has moderately clear rules on partial exemption, there is nothing underhand about it. I think this is an avoidance scheme, so I suspect this is something that will not affect IFAs.”