Advisers will have to charge their clients VAT if they offer them an outsourced discretionary fund management (DFM) service.

A new draft version of HM Revenue & Customs’ (HMRC) guidance on VAT exemptions for financial advice after the retail distribution review (RDR) has removed any reference to outsourcing to a DFM as it does not deem it an advised sale under the RDR.

New rules on outsourcing to DFMs are being reworked into a separate VAT guidance paper.