increase in outsourcing

Advisers who plan to outsource more of their investment-based advice post-RDR need to consider VAT implications before going forward, according to Assetfirst.

increase in outsourcing


Following an Institute of Chartered Accountants conference on RDR and VAT, Assetfirst said there were certain matters advisers needed to be aware of before outsourcing investment management to a third party.

Research published by Defaqto last week showed 42% of IFAs now outsource some or all of their investment process.

Andrew Whiteley, partner at Assetfirst, explained: "To operate as an adviser three main regulatory permissions are needed: advising on investments; arranging investments; investment management.

"Simply put VAT exemption relies on the adviser firm intermediating between the person who wants the investment and the provider of the investment, requiring the adviser to both advise on and then arrange the investment.

"Where the adviser only produces a financial plan and does not go on to arrange the product purchase, intermediation has not taken place and the adviser charge is not exempt from VAT." he continued.

Similarly he said when the adviser is offering a portfolio managing service and produces the financial plan but then passes on the arranging of the investment and any future rebalancing to a discretionary fund manager, both the initial and on-going advice and the discretionary management are subject to VAT.



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