VAT – to Charge, Or Not To Charge?
Posted on:
13
Feb
2013
by James Farmer
Parmenion is offering guidance on the issue of when, and when not, to charge VAT in the post RDR world where IFAs are charging for their advice instead of taking commissions on products they sell.
Jeanette Cook, Head of Compliance and Partner at Parmenion says: “VAT is often a complex issue and the answer to when to charge VAT is not always clear.”
VAT exemption applies where the Adviser undertakes to arrange a transaction in an exempt financial product. This is fundamental. It is the Adviser’s participation in the procurement of a VAT exempt product that enables VAT exemption.
Exemption does not apply to Advisers offering pure advice to a client, this remains the same as it’s always been and is similar to advice offered by accountants or lawyers. In this respect the abolition of commission has not changed the VAT treatment.
Jeanette adds: “For the VAT exemption to apply the Adviser must play their part in an advice process through which transactions occur in exempt products. Therefore, the litmus test Advisers should apply is to look at the proposed outcome of their advice; if this is relates to exempt products – then VAT exemption will apply.”
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