VAT on Discretionary Management Fees

We are an independent financial adviser (IFA) which charges VAT on ongoing management fees to clients where we have introduced them to a bespoke discretionary fund manager (DFM). The DFM charges VAT on their fees and according to VATFIN7600 it states that “…. there is no exemption for the introduction of the client to a discretionary investment management service because discretionary investment management is a taxable service that does not fall within the financial services exemptions. The service provided by the IFA is a taxable introduction to a taxable management service”. From our experience we have noticed that many large firms of IFAs are not charging VAT on these ongoing advice fees paid by clients. Some don’t charge on Pensions, and some on all products. We charge VAT to our advice fee on anything managed by a DFM of this nature. This puts our firm at a serious disadvantage to the majority or competitors which don’t appear to be charging VAT and means we are not operating in a level playing field. To be clear we are not asking about Managed Portfolio Services (MPS) products where many managers are able to exempt their management fees as the management of special investment funds. These are bespoke DFM services. Can you confirm whether VAT should apply?

Hi Greenshoots,
 We would need to refer you back to the relevant guidance you have provided:
VATFIN7600 - Intermediaries: independent financial advisors (IFAs)
It does clearly state that the supply is taxable at the standard rate of VAT
Thank you.