View more on these topics

VAT bombshell for network members

IFA networks could face crippling tax bills if a ruling forcing small networks to charge members VAT on fees is extended across the financial services industry.

Companies could be facing VAT bills adding up to several thousand pounds and there are fears that the policy change could be applied up to three years retrospectively.

In a letter from HM Customs and Excise, seen by Money Marketing, one network has been told to pay Vat on the charges it levies members.

The ruling would deal a massive blow to IFAs who are already struggling under the weight of huge rises in professional indemnity insurance premiums and regulatory fees.

Industry sources speculate that the VAT move could bankrupt medium and smaller networks and force thousands of small IFAs out of business.

The letter says the Customs and Excise policy unit will investigate ways of extending the change to all networks.

Networks believe this could cost the industry millions. A registered individual earning £40,000£50,000 a year could cost their network more than £100 a month extra in Vat, meaning that a 200-RI network would be facing a bill of £240,000 a year.

The ruling would have a massive impact on big players such as Sesame and the Tenet Group. A network with 6,000 RIs could face costs of £7.2m, with the bill tripling to over £21m if the move is backdated by three years.

Whitechurch Securities chairman Kean Seager says: “If the Vat decision is upheld, it could well be a very large problem for the more expensive networks. Many of their members will be able to move to a lower-cost network and be charged less after Vat is imp- osed than they are currently paying before Vat.”

Customs and Excise spokeswoman Florence Palmer says: “We will disseminate the decision to the sector if we receive evidence or confirmation that the sector as a whole is treating the same supplies in the same manner. However, the question of retrospection will depend on the individual taxpayer&#39s circumstances.”


Brokers hit out at C&G stance on laundering

Brokers are expressing frustration at the strict interpret-ation of the money-laundering requirements adopted by Lloyds TSB subsidiary Cheltenham & Gloucester. They say C&G has started demanding much more in terms of proof of identification from prospective borrowers. Brokers say that, previously, if there was a slight discrepancy between the spelling of a name on an […]

M&G homes in on commercial property

M&G M&G PROPERTY FUND Type: Unit trust Aim: Income and growth by investing in UK commercial property Minimum investment: Lump sum £1,000 Investment split: 45% retail, 31% industrial, 9% retail warehouse, 15% offices Place of registration:Guernsey Charges: Initial 5%, annual 1.25% Commission: Initial 3%, renewal 0.5% Tel: 01245 215707 The M&G Property Fund is a […]

Bananas Inc – Buy-to-Let Cashback Mortgage

Type: Buy-to let tracker mortgage Tracker term: Three years Tracker rate: 0.8% above Bank of England base rate Payable rate: 4.8% Minimum loan: £25,000 Maximum loan: Up to 85% of valuation subject to a maximum of £300,000 Income multiples: Monthly rental income must be at least 130% of monthly mortgage repayments Conditions: £650 cashback Arrangement […]

Octopus Asset Management – Eclipse

Type: Venture capital trust Aim: Growth and income by investing in unquoted and Aim-listed companies Minimum investment: Lump sum £3,000 Closing date: September 30, 2004 Charges: Initial 5%, annual 2.25% Commission: Initial 2.25%, renewal 0.375% Tel: 0800 619 7977


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm