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Offshore bonds & VAT

Dxm87Dxm87 Member
in Technical stuff

Hi all,

Just wondering is there VAT for advice fees and bespoke DFM fees for offshore bonds? We're having a discussion in the office and everyone has a difference of opinion so thought I would try here.

Thanks

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Comments

  • TomLloyd_ReadTomLloyd_Read Member

    Bit of a grey area so no wonder there are differences of opinion! Offshore bonds do not appear specifically in the VAT manual but they should fall under the definition of a retail investment product and therefore the initial advice should be exempt. Ongoing advice exemption depends on the other VAT related legislation (which of course is more complicated than it should be).

    I guess the only grey area comes from the fact a non-insured SIPP which holds just a bespoke DFM portfolio is not exempt as you basically ignore the SIPP wrapper and advice for bespoke DFMs is not exempt (advice fees for VAT exempt MPS is another grey areas I think....). One VAT consultant I spoke to said he would be minded to treat an offshore bond in the same way as a SIPP.

    If you take that approach though, gets a bit murkier if you have recommended a Dublin bond as the bespoke DFM fees are VAT exempt (they are not for an IOM bond, not sure about Lux). So if the DFM fee is exempt, is the advice?

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  • JamesmiaaAvaJamesmiaaAva Member

    @TomLloyd_Read said:
    Bit of a grey area so no wonder there are differences of opinion! Offshore bonds do not appear specifically in the VAT manual but they should fall under the definition of a retail investment product and therefore the initial advice should be exempt. Ongoing advice exemption depends on the other VAT related legislation (which of course is more complicated than it should be).

    I guess the only grey area comes from the fact a non-insured SIPP which holds just a bespoke DFM portfolio is not exempt as you basically ignore the SIPP wrapper and advice for bespoke DFMs is not exempt (advice fees for VAT exempt MPS is another grey areas I think....). One VAT consultant I spoke to said he would be minded to treat an offshore bond in the same way as a SIPP.

    If you take that approach though, gets a bit murkier if you have recommended a Dublin bond as the bespoke DFM fees are VAT exempt (they are not for an IOM bond, not sure about Lux). So if the DFM fee is exempt, is the advice?

    Hai TomLloyd_Read, it’s definitely a tricky one! From what I’ve gathered, advice on offshore bonds typically falls under VAT exemption since they’re considered retail investment products. However, when it comes to bespoke DFM fees, things get murkier. If the bond isn't in a SIPP, the advice might not be exempt. For Dublin bonds, the DFM fees are usually exempt. I’d recommend consulting with a VAT specialist to clarify these grey areas!
    Thank you...

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  • evelyn_emmaevelyn_emma Member

    @JamesmiaaAva said:

    @TomLloyd_Read said:
    Bit of a grey area so no wonder there are differences of opinion! Offshore bonds do not appear specifically in the VAT manual but they should fall under the definition of a retail investment product and therefore the initial advice should be exempt. Ongoing advice exemption depends on the other VAT related legislation (which of course is more complicated than it should be).

    I guess the only grey area comes from the fact a non-insured SIPP which holds just a bespoke DFM portfolio is not exempt as you basically ignore the SIPP wrapper and advice for bespoke DFMs is not exempt (advice fees for VAT exempt MPS is another grey areas I think....). One VAT consultant I spoke to said he would be minded to treat an offshore bond in the same way as a SIPP.

    If you take that approach though, gets a bit murkier if you have recommended a Dublin bond as the bespoke DFM fees are VAT exempt (they are not for an IOM bond, not sure about Lux). So if the DFM fee is exempt, is the advice?

    Hai TomLloyd_Read, it’s definitely a tricky one! From what I’ve gathered, advice on offshore bonds typically falls under VAT exemption since they’re considered retail investment products. However, when it comes to bespoke DFM fees, things get murkier. If the bond isn't in a SIPP, the advice might not be exempt. For Dublin bonds, the DFM fees are usually exempt. I’d recommend consulting with a VAT specialist to clarify these grey areas!
    Thank you...

    That’s really useful insight, thanks! I’ve also found the VAT rules around DFM fees to be inconsistent depending on the structure, so getting a specialist’s view sounds like the safest route,especially with the offshore bond nuances.

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