There is significant confusion and misinformation in the market right now, and what firms are looking for is a clear understanding of the VAT impact that any decisions they might make will have, as they adjust their business model to incorporate the proposed “Adviser Charge”.
- Irrespective of how and by whom a Financial Planner or Adviser is paid, the basic principle of VAT and services applies; “what is the nature of the service provided?”
- There are other considerations with services, such as “where is the service provided or performed?”, referred to by HMRC as “Place of Supply” rules, but lets stick to UK provided services.
It is my view, that many firms will need to be VAT registered as a result of the RDR, as product-related commission is consigned to the history books!
Guidance to date seems to have been aimed at delivering the answer that most advisers (and clients for that matter) want to hear.
However, VAT is complex, and simply claiming that advisory services are Exempt because they fall under the intermediation rules is, to be blunt, misrepresenting reality.
There will be a significant increase on the two key areas of advice, namely initial financial advice and ongoing reviews. Even where a product results (or the intention for one was there), the service could still be taxable and not exempt.
The FSA are, I’m sure, doing their best in talks with HMRC to find ways of avoiding mass VAT registration, and continue to wave the “But they only make Exempt supplies” banner.
However, look at it from HMRC’s perspective – Advisers will be able to claim VAT back on overheads (marginally in some cases), but the client will be paying VAT which stays in Revenue & Customs’ pockets!
So, if they can legally steer this industry sector toward VAT registration – as the saying goes, “you do the maths”.
- With my considerable HMRC experience, I can help guide you through the VAT maze.
- If you become registered, I will advise how to minimise impact and maximise benefits.
- And I can open up the magical world of “Partial Exemption” for you!
So, call or email as soon as possible, to ensure you are prepared and VAT compliant for the changes in 2012.
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November 2008 Budget....
| |
Autumn 2008 Budget |
Category |
Last Updated |
Size (Kb) |
| A |
Budget Summary |
Summary |
02/12/2008 |
39 |
Download |
| B |
Budget Detail |
Detail |
02/12/2008 |
384 |
Download |
| |
Downloads |
Category |
Last Updated |
Size (Kb) |
| C |
VAT Finance |
Notice |
12/01/2009 |
194 |
Download |
| D |
Insurance |
Notice |
12/01/2009 |
192 |
Download |
| E |
Partial Exemption |
Notice |
12/01/2009 |
176 |
Download |
