Clarity on VAT for discretionary fees needed
providing clients with the option of both types of managed service.
Some discretionary managers may see this as an opportunity to move to a single management fee with no separate dealing charges in order to avoid having to account for output tax on some dealing charges and not others.
Those providing both discretionary and advisory managed services may consider having consistent charging arrangements for both services. There are also firms who might find themselves benefiting from this change if they are subject to the partial tax exemption regime, with the enhanced proportion of VAT-able output increasing the proportion of recoverable input tax.
It will be important that HMRC consults with the industry to ensure clarity and consistency on all of these issues.
Andy Thompson is director of operations at the Association of Private Client Investment Managers & Stockbrokers (Apcims)