City Asset Management has become the latest fund management group to remove VAT from its managed portfolio service range of portfolios.
The change will take effect from May 1 and the company is currently working with all platform providers to remove the VAT charge.
According to Railene Waters, head of business development for CAM, this will be welcome news for both financial advisers who recommend the company's managed portfolio service and for the clients invested in the service.
Waters said: “This positive development will allow financial advisers to offer their clients high-quality investment management services at a competitive price of 0.25 per cent."
CAM, which is celebrating its 10-year anniversary this June, is the latest in a line of MPS providers who have cut the VAT after a ruling by HM Revenue & Customs last year caused debate as to whether VAT was not chargeable on intermediated model portfolio services offered by a discretionary fund manager.
Last year, FTAdviser reported on a ruling by HMRC in the case of Tatton, where the Revenue found the company's model portfolios were exempt from this tax
The ruling threw into question when is VAT chargeable on DFM services and when isn’t it, and how, if at all, it might affect the VAT on advice.
Since then, several companies have removed VAT from their MPS, including Brewin Dolphin, AJ Bell, RSMR, Seven Investment Management and Quilter.