Q. From 1 January 2013 Independent Financial Advisers (IFAs) are not permitted to charge commission, and should instead charge fees for the advice and services they provide. Do firms of IFAs have to charge VAT on all the advice they give or is some advice exempt from VAT?
A. The VATman's guidance says the IFA's advice-only services will be subject to VAT, but if the fee is for an introduction to an exempt financial service, that introduction fee will be exempt from VAT. As an IFA you need to sort out exactly what you are charging for:
- general advice
- introductions to exempt services (such as to authorised dealers in securities); or
- introductions to services which are subject to VAT such as discretionary investment manager services.
We need to discuss your particular circumstances in detail to sort out the VAT position.