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FundsNetwork: IFA contracts could mitigate VAT liability

by Michelle Abrego on Nov 09, 2012 at 12:46

FundsNetwork: IFA contracts could mitigate VAT liability

IFAs looking to bullet proof their advice against becoming liable for VAT should ensure their client contracts are carefully worded, according to platform provider FundsNetwork.

Paul Kennedy, head of tax planning at FundsNetwork, said recent changes to HM Revenue & Customs (HMRC) guidelines on VAT on advice meant it was important advisers demonstrated the intention to intermediate on a financial product in order to avoid VAT.

Speaking at the Personal Finance Society (PFS) conference Kennedy said: ‘Evidence is going to be really important in terms of determining VAT treatment and we don’t test it with hindsight, it’s about the intention of the parties, you [advisers] and the client, that you write at the outset.’

He added that analysis of a client’s pension arrangements was likely to be Vatable, unless the adviser goes on to find and arrange a more suitable policy.

Kennedy also warned that the move to adviser charging, particularly fees, could also have tax implications for advisers.

He said advisers needed to consider whether to use provider facilitated adviser charging or take a fee directly from the client depending on the product being sold

The tax treatment of collective investments and bonds still needed to be clarified by HMRC, he said.

2 comments so far. Why not have your say?

Mr Ed28

Nov 10, 2012 at 16:12

The tax treatment of bonds and collectives is already sorted. Have a hunt around the HMRC site for more details.

Avoiding VAT and bringing down the wrath of the HMRC's hit squads? Good luck with that.

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Nov 19, 2012 at 15:11

I thought I'd heard that due to some EU ruling, HMRC had now removed the concept of 'an intention to intermediate' test and therefore any advice/service element would now be VATable, even if it had let to an exempt transaction........?

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