The network approached the Inland Revenue after isolated reports that mortgage support service companies could be hit by a retrospective17.5 per cent VAT charge.
Director of mortgages at the Association of Mortgage Intermediaries (AMI) Chris Cummings said the exemption notice could be extremely valuable for Classic. He added that blanket implementation of the tax had the potential to destabilise the current market.
“Our understanding is that even if the Central Policy Office at the Inland Revenue do decide to impose VAT on networks they are only able to do this up to the last VAT sign off. Classic have gained capped liability,” he said.
Tony Corrigan, managing director of Classic Network Solutions, said: “We decided that we had to have clarification on the matter.”
But Cummings cautioned firms against looking to emulate Classic saying they could draw attention to themselves ‘opening up a whole can of worms’.
Tony Jones, managing director of Midlands-based network Pink, questioned the worth of Classic’s exemption.
“If the Central Policy Office for the Inland Revenue decides to rule if networks are in fact not VAT exempt, then they can charge us up to three years tax retrospectively,” he said. “I would say that networks should plan for the worst but hope for the best.”
