FE Investment has become the latest DFM to remove VAT payments from its charges, after HMRC told managers to ‘self assess’ whether they should pay the tax.
The change will apply across all of its portfolios, including its Hybrid, Mosaic, Responsibly Managed and Income ranges.
The DFM, which is part of FE Fundinfo, has assets under management of £4bn.
Rob Gleeson, chief investment officer at FE Investments, said: “Our risk-targeted approach has been much in demand among advisers over the past year as the markets have suffered from periods of extreme volatility.
“By reducing our fees through the removal of VAT charges, we are making our offering even more competitive so even more end investors can benefit from our investment approach.”
Last month, HSBC became the latest wealth manager to remove VAT from its managed portfolio service.
The change comes after a number of wealth managers removed VAT charges after HM Revenue and Customs ruled that discretionary fund managers supplying MPS are exempt from the tax.
In June last year, Tatton removed VAT on its MPS after HMRC agreed the vehicle was exempt from the tax, and the asset manager was refunded £1.7m
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.