VAT Reform in Financial Services Working Group

Industry challenge

TISA believes that tax policies should support saving, reward long term investment and be easy to understand, but the way in which VAT is applied to financial services is complex, presenting unique challenges for the sector and cost to consumers.

Group purpose

The VAT Reform Working Group is made up of firms that manufacture, sell and service financial services products so has a deep understanding of how the industry works across the distribution lifecycle and how each stage is impacted by VAT. 

TISA’s mission is to improve the financial wellbeing of UK consumers so it is crucial to represent the consumer and understand how the indirect tax regime influences decision-making, and the impact that any proposed changes to VAT law may have on consumers. 

TISA is in a strong position to advise HMT, HMRC and their advisers on how proposed changes to VAT will affect the industry and consumer, as well as warn of potential unintended consequences.  TISA is also in a strong position to monitor the effect of implemented new VAT regime and advise HMT and HMRC accordingly.

Area of Focus

• The VAT Reform Working Group has reconvened and is working on recommendations to HMRC in respect of the application of exemptions following the removal of the ‘direct effect’ principle, which means firms can no longer rely on EU rules and their previous interpretation. This is particularly relevant to firms that introduce customers to deposit accounts. The working group is also considering recommended measures that could incentivise greater levels of retail investment.
• Ensuring that the Retained EU Law (Revocation and Reform) Act 2023 does not result in policy outcomes that disadvantage UK financial services firms and consumers.
• Make recommendations to HMRC and HMT on VAT policy, including the review of the HMRC Financial Services VAT Policy Statement.
• The group will focus on recommendations that seek to simplify the regime, incentivise good consumer behaviours and outcomes, foster innovation and provide clarity where uncertainty exists. 

Aberdeen Group
Bank of Ireland (UK) PLC
Barclays Wealth
Capital Group
CMS Cameron McKenna Nabarro Olswang LLP
Hargreaves Lansdown

James Hambro & Partners LLP
Killik & Co LLP
L & G plc
LGT Wealth Management UK LLP
Lloyds Banking Group
RBC Europe

Phil Turnpenny, Policy Executive leads on this work

Chair: Anna Burchner, CMS Cameron McKenna Nabarro Olswang LLP

Publications

News