View more on these topics

HM Customs rules against VAT on network fees

There has been mounting confusion over exactly what the VAT treatment of services supplied by ARs operating under networks would be.

But in a Business Brief released last week Customs defines networks as firms which appoints, trains and takes liability for ARs in accordance with FSA requirements and then subcontracts its functions to those ARs who interact directly with the client and the product providers on behalf of the network.

Any network that comes under this definition will be exempt from paying VAT on income derived from fees and commissions and the onward payment to the ARs is “consideration for the AR&#39s VAT exempt intermediary services supplied to the network.”

However, fees, whether paid direct to the network or to the AR, in respect of regulated advice only services, which fall outside the exemptions for intermediary services, are the network&#39s standard rated income.

And any onward payment made by the network to the ARs will be liable for VAT and will be due if the AR is registered or required for VAT.

Networks that just offer marketing or compliance support will face a different VAT treatment.

Recommended

Your future is in your own hands

Five years ago the world was gripped with insecurity. What would the year 2000 bring? IT anoraks predicted computer chaos. The media was in a frenzy, suggesting that kettles wouldn&#39t work, cars wouldn&#39t start and planes would fall out of the sky. In short, the world as we knew it would end. In preparation, IT […]

Is there any need for another trade body?

The Chartered Insurance Institute this month launched the Society of Mortgage Professionals and is looking to invest £2m in it to help brokers become better qualified and increase their professionalism. Richard Fox, currently compliance director at the MCCB, is to be SMP&#39s chief executive from November 1, the date it will be up and running. […]

Mortgage 2000 announces final phase of roll out for Encore

In light of forthcoming regulation, Encore – which already features full MTE integration – has undertaken a three-phase roll out programme to ensure it will be fully compliant under the regulatory regime come October 31. Encore has already made available an &#39Initial Disclosure Documents Wizard&#39 within Encore, rather than terms of business, which is mandatory under […]

We must focus on ability to repay

Ever since the Monetary Policy Committee decided to make the first of five increases in the Bank of England base rate we have been bombarded with boom and bust stories. The pessimists have had their chance to blast the trumpets of doom and the optimists have been able to clash the cymbals of reason. Adding […]