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February 7, 2014updated 04 Apr 2017 2:31pm

HMRC scraps plans to impose VAT on platform charges

HM Revenue & Customs (HMRC) has scrapped plans to impose VAT on core platform service charges.

By Verdict Staff

HM Revenue & Customs has scrapped plans to impose VAT on core platform service charges.

HMRC had confirmed that platforms services including execution and custody activities will be exempted from VAT.

In October, HMRC has consulted with the platform industry ahead of expansion of VAT guidance for charges.

However, HMRC said that charges for advice, information, research and market data services, and portfolio management services will be liable to VAT at the standard rate.

HMRC is anticipating issuing finalised guidelines later this month. HMRC had decided to levy income tax on rebates received by platform clients in April last year.

Mellor-Clark, member of the Investment Management Association’s VAT committee, said: "The nature of platforms’ service offering is constantly changing and impacts on payment arrangements within the supply chain as well as fees charged to the customer.

"Any VAT charges applied to non-exempt platform services may therefore need to be swallowed by the businesses operating within that value chain," he added.

A spokesperson for HMRC said: "HMRC is consulting on an informal basis with industry representatives as part of this process. We are not focusing the review on any particular aspects of the operation of these platforms, and all areas are under consideration, including the different charging structures used by these platforms for the provision of portfolio management services."

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