DFMs and VAT
Wildparaplanner
Member
Hi all,
What are the specific rules around DFMs charging VAT or not charging VAT? Does anyone have a decent explanation or article which explains it as I cannot find anything with any substance to it...
Thanks
Wild
Comments
The DFM specific HMRC legislation is here
https://www.gov.uk/hmrc-internal-manuals/vat-finance-manual/vatfin5800
All of the legislation is here
https://www.gov.uk/hmrc-internal-manuals/vat-finance-manual/vatfin5000
The MPS bit seems to be a grey area and I can only assume DFMs who run MPS without VAT are basing this on an interpretation of the special investment funds exemption? And the SSAS VAT exemption on DFM fees where there are two or more members uses the Pension fund exemption.
I seem to recall one DFM said the advice they had received was VAT did not need to be charged on MPS but they were earmarking funds to pay it if HMRC disagreed.
And this is old but still seems correct in terms of advice fees and DFMs (last page)
https://www.thepfs.org/media/3903332/professional_direction_vat_and_adviser_charging_no_5.pdf