Don't look VAT in anger: Is the MPS trend here to stay?

VAT operational issues explored

After HM Revenue & Customs indicated VAT may not be necessary on top of model portfolio services, DFMs have been racing to remove the charge from their propositions. Jon Yarker investigates what's happening with the trend and whether the tax will return.

Over the past 12 months, DFMs throughout the UK have been removing VAT from their model portfolio services (MPS). This is an industry-wide trend and, according to NextWealth research from December 2020, 14 firms out of a sample of 30 had removed this tax.  In addition, at that time a further six firms were actively reviewing the issue and, since those figures were gathered, a further three firms have ditched VAT on their MPS. This highlights a significant contrast from 2019, when NextWealth found all discretionary fund managers (DFMs) charged VAT (except for one that included this tax...