Appointed representatives (ARs) of the network will now have to pay VAT covering the period 1 November 2004 to 31 December 2006 after HM Revenue & Customs delivered its final ruling that the fee should be subject to VAT, a decision Network Data has contested since December 2004.
However, the firm has been criticised for not doing enough to help its brokers, with one unnamed AR telling Mortgage Introducer:
“It knew this was coming so it should have allowed for it. Firms with more than one adviser are now going to face a hefty bill. It’s not so much about the money, but rather the principle because as a network, I would have thought it would try to help.”
AR firms have been asked to respond by 15 December with notification of how they will pay the bill, with the option to pay either immediate or over three or six months.
Richard Griffiths, managing director of Network Data, admitted he was disappointed with the verdict but played down the wider impact on the firm.
“We couldn’t have created a fund, as where would the money have come from? We hoped it wouldn’t come to this.”
However, Griffiths warned other networks could be affected by the ruling.
“In theory this ruling should be applied across the board. I’m sure there are other networks who are trying to keep similar cases quiet. They can try to run but, as we all know, you cannot hide from the taxman.”
