Momentum Global Investment Management has become the latest firm to remove VAT from its model portfolio service, with effect from September.
Following guidance from HMRC, MGIM has initiated the changes on all the platforms it works with.
The firm said the removal of VAT payments will apply to the whole of its risk-rated model portfolio range and reduce ongoing management fees to 0.25 per cent.
Ferdi van Heerden, chief executive officer at MGIM, said: “We are pleased to announce that VAT charges will no longer apply to our range of portfolios.
"Our outcomes-based investing approach has been much in demand over the past year as markets suffered from periods of extreme volatility and advisers sought the core component for client portfolios.
“By reducing our fees through the removal of VAT charges, we are making our offering even more competitive so that even more end investors can benefit from our investment approach.”
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 VAT is chargeable on DFM services and when it isn’t, and how, if at all, it might affect VAT on advice.
Most DFMs are seeking an individual ruling from HMRC on whether VAT is payable on their MPS, though the taxman has now told multiple firms to ‘self assess’ the situation.
The range by MGIM offers seven multi-asset risk rated growth portfolios and an income portfolio ranging from risk 3 to 8.
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