DFMs dodge VAT bullet on transaction fees

Her Majesty's Revenue & Customs (HMRC) has upheld the VAT exemption on discretionary fund manager transaction fees.

The exemption had been at risk since last year when the European Court of Justice (ECJ) determined that discretionary portfolio management should not be exempt from VAT based on a case involving Deutsche Bank.  However, the Revenue said the Deutsche Bank ruling only considered the VAT position of periodic fees charged on a flat fee basis, where there was no direct link to the transactions being executed. The exemption will continue to apply where discretionary fund manager fees are charged per purchase or sale of investments, but not where fees are charged on an annual or other period...