VATFIN7670 - The Retail Distribution Review - ongoing services

Ongoing periodic review services (i.e. a commitment by the adviser to revisit the client’s investments on a periodic, usually annual, basis to ensure they still meet his/her requirements) will only be exempt if the contract for the arrangement services also provides for the subsequent review services to be undertaken (whether or not the customer has the option to choose not to receive the review services before they are actually performed)

If the customer contracts for periodic review services under a separate contract to that under which the initial arrangement services were provided, some or all of the process outlined in VATFIN7665 may occur again and the VAT liability will be determined according to the nature of the services the customer has agreed the adviser should perform.

When considering agreements for the provision of ongoing services, it is necessary to distinguish between the advised sales services of the type normally provided by financial advisers, and portfolio management services of the type normally provided by wealth managers (although it is important to remember that it is the nature of the service that determines the VAT treatment and not the nature of the supplier). Portfolio management services can be distinguished from other advisory services because there is an ongoing commitment to monitor and manage an individual client’s investment portfolio to formulate investment decisions or recommendations with a view to improving the performance of the investments. More information on the VAT treatment of portfolio management services can be found at VATFIN5800