Quilter is the latest provider to remove value added tax from its managed portfolio services as managers continue to ditch the extra bill from their offering.
FTAdviser has learned that the wealth manager has scrapped VAT from all its applicable services: Quilter’s MPS, the Quilter Cheviot MPS, the Wealth Select MPS and Quilter Investors’ Portfolio Management.
It comes after Quilter asked HM Revenue and Customs for a formal VAT ruling for its MPS, to which the taxman told the firm it could ‘self assess’ whether the tax was leviable on such services.
Based on existing guidance and external advice, Quilter said it was now treating its MPS as VAT exempt.
Jeremy Mugridge, head of proposition marketing at Old Mutual Wealth, said: “We are pleased to be able to confirm that the Wealth Select MPS will be treated as VAT exempt.
“This simplifies the MPS pricing on the Old Mutual Wealth platform and provides better outcomes for clients.”
David Butler, head of distribution for MPS at Quilter Cheviot, added the firm was working with all platform partners to remove the tax at the earliest opportunity.
The question of whether VAT is leviable on MPS services surfaced earlier this year when the taxman ruled Tatton’s MPS was exempt from the tax.
Other DFMs have soon followed suit. In September Brooks Macdonald said it was undergoing a review of its MPS and was seeking a ruling that it was not subject to VAT, while Brewin Dolphin stopped charging VAT on its service from October 1.
Last week FTAdviser revealed that Investec had removed VAT from its MPS while asset manager IBOSS announced just this morning (December 3) that it would do the same from January 1.
FTAdviser has learned that most DFMs have sought an individual ruling from HMRC on whether VAT is payable on their MPS, and the taxman has now told multiple firms to ‘self assess’ the situation.
MPS fees have seen downward pressure in recent years, with firms charging as little as 0.15 per cent.
With DFMs across the market looking to knock VAT off the price, it is likely the average price will slip further.
The trend has triggered experts to encourage advisers to check the amount of cash they were forking out for DFMs, with some saying it was likely some DFMs were levying VAT on their service just because it was the norm.
It also rekindled concerns that with many DFMs adopting a centralised MPS, advisers needed to understand whether they were offering a truly discretionary, bespoke service to the client.
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