PlatformMay 3 2017

Platforms accused of failing clients on CGT sums

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Platforms accused of failing clients on CGT sums

Platforms that do not offer a tool to calculate capital gains tax have been accused of failing their customers, with calls for providers to make it clearer if they do not provide this feature.

While platforms are not responsible for calculating capital gains tax, most now offer a service which lets clients see their tax liabilities, with some even estimating the tax bill in hypothetical scenarios.

But advisers have criticised platforms that don’t offer this tool for failing clients who pay a fee for their service. 

Trevor Whiting, partner at advice firm Core Financial, said advisers are faced with the risk of getting CGT calculations wrong, which is largely a problem with accumulation funds, rather than income funds, because advisers don’t get the information about price increases.

Mr Whiting said some platforms might shy away from offering CGT information for fear of making a mistake.

He said Alliance Trust Savings had refused to provide him with the information for a client because it was not confident about the figures.

In response, Sara Wilson, head of platform proposition at Alliance Trust Savings, said it was advisers and clients who are "best placed" to calculate CGT liability, "taking into account the individual's entire financial situation which may include assets not on the ATS platform”.

But she said ATS supplies “all relevant information to support this”.

Keith Churchouse, principal at Chapters Financial, branded platforms which don’t offer a CGT service or provide the information to calculate the tax manually “almost useless” for financial planning.

He said platforms should be clearer if they can’t do it, giving advisers the chance to shun them.

“CGT tools are now ever more important, as platforms compete against discretionary fund managers who mainly offer this service as a norm,” he said.

Figures from consultancy firm the Lang Cat estimated that 15 of the 18 platforms in the advised sector now offer a CGT tool.

AJ Bell is the latest platform to add this tool to its system, and Billy Mackay, marketing director at AJ Bell, said advisers had put the CGT tool at the top of the wish list.

However, he said the challenge for many platforms is upgrading existing technology and the significant cost that goes with it, suggesting CGT tools might have lost out on a “priority war” with other work needed on platforms.

Bill Vasilieff, chief executive of Novia Financial, said he introduced the tool on his platform years ago to try to make advisers’ jobs easier, but denied there should be an expectation for all platforms to have this feature on their system.

“Calculating CGT is not straightforward so we needed to do something,” he said, adding: “We are confident that our tool works, but we put disclaimers on it.”

Terry Huddart, market analysis manager at the Lang Cat, said the platform was the best placed piece of software to do the calculations because it can connect all of the trading activity directly to the tool. 

“The reality is that platforms don't tend to shout too much about what they don't offer; rightly or wrongly, it falls to the adviser to ask the questions.”

Mr Huddart said platforms with CGT functionality tend to charge more, adding this has been a hot area of development recently.

Imran Khan, managing director of the Investment Software group, which provides tax tools for businesses, said it is possible some platforms have been focused on regulatory changes, instead of optional add-ons like CGT tools.

While he said CGT tools should be simple to install, he accepted that some platforms operate using older technology, meaning they would have to connect it to a separate modern CGT system.

katherine.denham@ft.com