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VAT&#39s not the way to do it

IFAs which are members of networks may face being clobbered with a very nasty VAT bill.

It appears that Customs & Excise is poised to force networks to charge its members VAT for the use of network services regardless of whether they take a percentage of commission or a fee.

With the average annual fee on some estimates being £8,500, this is a substantial blow of nearly £1,500.

The planned move is revealed in a letter to a network from Customs & Excise, seen by Money Marketing.

To make matters worse, it is suggested that it may be necessary to consider a retrospective charge for the last three years.

The move is not just a potential blow to individual members&#39 pockets but also to networks themselves.

We do not know yet whether support services organisations will be cracking open the Champagne in anticipation of a flood of new members or if they will be hit as well.

Whatever the thinking of the VAT man, and whatever reason the subject has been opened now, it is very regrettable.

The pressures on small IFAs in particular are acute at the moment and it would be good if the taxman would think again.

It is certainly a reason for Aifa to spring its lobbying machine into action and yet we fear it is always difficult to persuade a taxman not to tax.

The political masters of Customs & Excise might consider the consequences. If it is a goal to get people to take decent advice before making difficult financial decisions, then surely a move which must put up the price to the client or customer must be a bad one.

That is the theory. In practice, the Government will probably just pocket the money.


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