HMRC rolls back over VAT on platform charges
06 February 2014
Posted by: Author: Michael Glenister
Author: Michael Glenister
HM Revenue & Customs has decided not to impose VAT on platform charges following industry negotiations.
Draft guidance from HMRC, seen by Money Marketing, sets out that core platform services including execution and custody will remain VAT-exempt. Final guidance is expected later this month which is likely to confirm this is the case.
In the draft guidance, HMRC says charges for ‘advice, information, research and market data will be liable to VAT’, but platforms say any research costs are included within the overall platform charge, so no VAT extra will be payable.
Pinsent Masons partner Darren Mellor-Clark sits on the Investment Management Association’s VAT committee.
He says: "When rumours started to circulate that HMRC was looking at platforms and VAT treatment a lot of people were really worried. This guidance could have been a lot more painful.
"HMRC has approached this from the view that platforms mainly provide execution and custody. It is a swiftly developing market and what platforms can do is changing all the time.”
Mellor-Clark adds if platforms start breaking down their platform charge and imposing separate costs for other services HMRC may revist VAT liability.
Tisa technical director Jeffrey Mushens says: "It has been a good process. The industry was a bit nervous but people are happy with the consultation result that has come out.”
Jacksons Wealth Management managing director Pete Matthew says: "It could have been another layer of complication, which would have increased costs that are then passed on to the consumer so this is a good outcome.”
A spokesman for HMRC says: "In its review of the operation of investment platforms, HMRC is consulting on an informal basis with industry representatives as part of this process. We are not focusing the review on any particular aspects of the operation of these platforms, and all areas are under consideration, including the different charging structures used by these platforms for the provision of portfolio management services.”
This article first appeared on moneymarketing.co.uk.