Advisers May Face Extra VAT Charges in Wake of RDR

Some groups are warning that the VAT status of adviser charging is to become more complex and may lead to advisers being forced to beat more costs in VAT unless contracts are reviewed. Rules surrounding the VAT treatment of adviser charging are likely to come further into effect post-RDR, which means that advisers will need to review their contracts to ensure they aren't paying extra in VAT that they don' t need to. Andrew Power, partner in the financial services consulting division on Deloitte, said that "It will, therefore, be important to ensure that the nature of services provided are understood and documented correctly." Advisers will need to review the wording of all contracts or agreements with customers to ensure that they don't leave themselves open, as these contracts may not mention anything about VAT in connection with current charges levied. Powers continues "Unless the contract wording is changed to show any fees charged are exclusive of any VAT payable, the advisers would contractually have to bear any VAT payable on their fees."
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