HSBC AM has become the latest wealth manager to remove VAT from its managed portfolio service.
The MPS will have an ongoing charges figure ranging from 0.22-0.24 per cent dependent on risk profile after the changes come into effect on May 1.
HSBC Asset Management offers a range of five globally diversified risk rated profiles – Cautious, Conservative, Balanced, Dynamic and Adventurous.
Its portfolios are actively managed and are available on the Aviva, Embark, FE Transmission, FidelityFunds Network, Novia and Standard Life platforms.
Smera Ashraf, head of UK discretionary distribution at HSBC, said the firm was always looking to innovate and make sure its offerings were competitive on price.
“One of our advantages is that we have a large range of funds that we can access efficiently as fulfilment in our portfolios at no additional cost to our clients,” she added.
The change follows a number of wealth managers removing VAT charges after HM Revenue and Customs ruled that discretionary fund managers supplying MPS are exempt from the tax.
Last June, Tatton removed VAT on its MPS after HMRC agreed the vehicle was exempt from the tax, and the asset manager was refunded £1.7m
At the time, Tatton told FTAdviser it had not charged its clients VAT and had covered the costs itself.
A spokesperson for Tatton said: “We were always of the view that VAT should not be applied to managed portfolio services.”
This was followed by a rush of other fund managers following suit, including Sanlam, Quilter and Investec.
FTAdviser understands that most DFMs have sought individual rulings from HMRC on whether VAT is payable on their MPS, and the taxman has told firms to ‘self assess’ the situation.