The newly laid draft guidelines says, "The term ‘advice’ under RDR covers a broad range of scenarios including primarily recommendation, referral and intermediary work around product distribution which would continue to be VAT exempt under general principles."
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However where the service provided to the customer was purely advice or recommendation, any charges to the customer would carry VAT at the standard rate, the newly released guidelines added.
For ongoing services, the VAT liability would depend on the services the customer had agreed the adviser would perform.
The HMRC guidance also means that where the adviser had arranged the sale of a retail investment with a customer, no VAT would be due on any charges made to the customer, regardless of whether or not the sale of the product was finally concluded.
HMRC guidelines also mandates IFAs to keep evidence to prove the services they have provided were VAT exempt and that VAT liability for ongoing services would depend on the services the customer had agreed the adviser would perform.
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By GlobalData
