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Professional Adviser and Fidelity FundsNetwork have joined forces to urge advisers to protest now against VAT charges on advice post-RDR.
We will then take your concerns direct to HMRC before it issues key VAT guidance in the next couple of months.
The Professional Adviser and Fidelity FundsNetwork campaign wants advisers to unite around the arguments and lead the debate on VAT, instead of giving the taxman and policymakers a free hand to tighten the rules.
Current European Union tax laws, which govern the UK’s legislation, remain unchanged post-2013. However, the RDR’s abolition of a clear link between the product and the charge in the form of commission has left IFAs confused over what part of their service will be VATable.
Head of FundsNetwork Tax Planning, Paul Kennedy, said: “There is an oft-quoted adage that ‘advice is VAT-able …intermediation is exempt’. I think the use of the word ‘advice’ is causing some confusion.
"The law is that anything that is intermediation is exempt and therefore the pivotal issue we need to agree with HMRC is what is intermediation.”
He said a narrow interpretation of intermediation might be simply recommending or arranging a financial product.
However, he maintains that “intermediation means any activity that could lead to a product being created, continued, altered or ended, including the provision of advice that reflects specialised knowledge of a financial product.
“A wider definition of intermediation would see most adviser activities remaining outside the VAT net, a narrow one would not,” he added.
The main problem is HMRC is in the dark on the nature of activities carried out by advisers but is “anxious to understand advisers’ views on the issue”, Kennedy said.
Through the Professional Adviser and Fidelity FundsNetwork campaign, we aim to explain to the taxman exactly what advisers do and argue the vast majority of their tasks are intermediation and therefore exempt from VAT.
Advisers who want to be part of the campaign should send a detailed breakdown of what services they provide for clients to: fwd@fundsnetwork.co.uk.
Kennedy will then compile a list of common adviser tasks, which he will present to HMRC, along with a legally constructed argument for why they should not be considered VATable.
Clients faces a 20% increase in the cost of advice if VAT is applied, which many IFAs fear will be too much for them to swallow on top of the switch to adviser charging.
However, advisers who leave off VAT are worried they will be landed with a huge bill for unpaid tax at the end of the year.
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who?
Kennedy will then compile a list of common adviser tasks, which he will present to HMRC, along with a legally constructed argument for why they should not be considered VATable. How does he know what we do though? Self appointed spokesman for a profession that he isn't a member of? How does that work? I would be very very careful about giving him any such 'authority' Read more:
Posted by: snooks
What is an IFA !?
@ MICHAEL BATES This is the whole problem; you are assuming you provide no advice without a product being the end solution. Who says that's right in every case...do you never simply adjust their financial planning and acheive a solution...or give advice involving a product which they then unexpectedly write elsewhere ? VAT needs to be sorted out, sooner rather than too late. @ Snooks - agree, hence something AIFA should be doing ?????
Posted by: Yet another commentator
AIFA?????
GOOD GRIEF NO!!!!! Please, please do not allow AIFA any where near the VAT subject. If you think HMRC have no idea what we do then AIFA are not much better. Remember they will not allow an IFA to be Chief Executive! Even the FSA understand small IFA's better than AIFA!
Posted by: Grosvenor
headless chickens
The problem IFAs have is that we have NO representative body. My CA just told me that and he's always right
Posted by: snooks
headless chickens
The problem IFAs have is that we have NO representative body. My CA just told me that and he's always right
Posted by: snooks
Adminner
WHY is there no representative body for IFA's? could it be because IFA's themselves are generally too busy being compliant to divert their attention away from the smaller and smaller amount of time they have to actually do client facing work. That is when they are not spending time fighting to get some sort of service out of providers. Smaller firms are effectively being hounded out of business by the cost of fees over which they have no control, taxes, requirements for more and more qualifications to carry out a narrower and narrower range of business, cpd to keep up with all the rule changes and changes in legislature, the cost of compliance, PI cover, FSA Fees, Ombudsman Fees Compensation Scheme Fees - none of which are adjusted to reflect any sort of claims history. (It seems the good just pay for the bad). Heaven forbid that a firm should employ anyone and fall foul of employment law, income tax and national insurance contributions, health and safety and oh yes and then there is the cost of premises and insurance and transport back office systems and research tools. And now........ as if that weren't enough and I'm sure I've left some things out.. Oh yes the RMAR - sorry Gabriel reporting - and now the threat of V.A.T., yet another nail in the coffin to erode income even further. AND IFA's are held responsible for their work way beyond retirement - I don't recall any prime minister having to pay personally into his dotage for the decisions he took when in government. Could somebody tell me which other group of people this applies to, or why there is such discrimination against IFA's, the majority of whom do a good and honest law abiding and compliant job for their clients? I think a representation to the European Court of Human Rights is what's called for here let alone a letter to the tax man via someone who isn't even an IFA. Sorry this is so long - I suddenly felt totally p'd off. WHY is there no real representative body for IFA's? Could it be that they're all too cynical and disillusioned to think that anything they have to say on any of the above would have the blindest bit of notice taken of it. Oh yes and No-one has yet mentioned the consumer of advice - the people who need the advice the most are also being priced out of the market. PLEASE WAKE UP, STOP MOANING AND START SHOUTING BACK. - Needless to say I'm not an IFA otherwise I wouldn't have the time to have written this rant - but then I did do it after hours whilst my husband was out of the office travelling back from a client appointment which he'll get back from about 10 oclock tonight. I agree whole heartedly that IFA's should be properly qualified & compliant and that they should of course treat their customers fairly, but when will someone treat IFA's fairly - ha! some hope? Ahhh that's better.
Posted by: Pat Mason
At last , Clarity on Vat ?
Thank you Fundsnetwork This is the right question and you can afford Kennedys I cannot ! But i' d pay for a definitive answer from HMRC
Posted by: Lewis Jarrett
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IFA VAT
Who decided to create a living for those who are debating this? An IFA is a broker = intermediary. Full stop. Bye-bye VATman.
Posted by: MICHAEL BATES