NEWS & VIEWS
London, England, 10 July 2024: Aviva and FSL have announced a joint agreement to provide enhanced tax reporting capability from FSL, delivered through Aviva’s adviser platform.
Under the joint agreement, excess reportable income (ERI) reporting will soon be available for advisers using Aviva’s adviser platform, powered by FSL’s market-leading tax calculator technology, CGiX.
This is the first of a series of technical integrations delivering enhanced tax solutions, that will be available on the platform during the coming months. Explore our managed SaaS Bureau solutions to simplify tax reporting. Also on the roadmap for delivery this year is a Capital Gains Tax (CGT) ‘What if’ scenario builder, planned for launch later in the year.
It is compulsory for clients to report ERI, which is created when clients are invested in Offshore Reportable Funds where the profit has not been paid out as interest or a dividend. These investments have become far more widely used with the rising popularity of Managed Portfolio Solutions (MPS) – 72% of which have offshore funds. However, historically it has been difficult to report taxable income accurately and consistently. This has the effect of leaving clients at risk of reporting wrongly or not at all, and in these circumstances they can be liable to hefty HMRC penalties. Because of this, some advisers limit the number of funds they consider for a client’s investments, in order to avoid a potential tax mis-reporting issue.
Al Ward, Head of Aviva’s Adviser Platform, comments: “Efficient and compliant tax planning and advice is an integral part of what advisers do. Historically, ERI reporting in particular has been an issue, principally because of the lack of both clarity around where information is kept, and no required standard reporting mechanism. Our partnership with FSL has been driven by adviser demand, and will deliver some truly ground-breaking innovations, removing complexity from the process and in particular providing relevant tax reports in one place. This is the first in a suite of tax solutions aimed to make tax reporting much simpler for advisers, which will help their clients fulfil all their obligations required by HMRC.”
“Delivering best in market solutions, such as those offered by FSL, is a clear demonstration of our commitment to deliver for adviser firms and our desire to bring solutions to market that augment and enhance our core platform offer. Anecdotally, we have had feedback from advisers that not being confident in the ability to clearly and consistently report ERI for clients, has proved a disincentive to recommending certain kinds of products, as there are concerns that they may contravene the Consumer Duty values of avoiding foreseeable consumer harm, and serving target markets effectively. Having this facility on the platform will alleviate those concerns.”
The Aviva adviser platform already has a CGT calculator built into the adviser toolkit. The new technology integration announced today will build on those capabilities and in the longer term introduce more of FSL’s CGiX suite of products, such as the ability to perform CGT ‘What If’ calculations.
Michael Edwards, Managing Director of FSL, comments: “We have been campaigning about the importance of accessible ERI reporting for some time, and we are delighted that this agreement with Aviva will provide a way for advisers to ensure that their clients have the necessary information to meet HMRC’s demands. This will only become more important in the future – HMRC are focusing on off-shore investments, and last year alone sent out 31% more ‘nudge’ letters than they had the previous year, so the consequences of getting this wrong are clear. The responsibility for reporting lies with the client but advisers have told us it is a priority for them to help their clients in this regard.
“This functionality will provide a simple and transparent way to ensure advisers can support clients reliably and easily, and is a critical part of the services and support that advisers can offer. It provides much-needed transparency in an area that has been overlooked too often.
“We are delighted to be working with Aviva on this, and other, future tax-supporting services.”
ENDS