Current VAT rules threaten to penalise clients paying in instalments and could undermine the RDR's aims, warns Skandia.
Investors who choose not to pay for advice up front will be subject to 20% VAT on future ongoing payments, or 17.5% for advisory services supplied before the tax rate rises on 4 January 2011.
The rules, which apply now, mean investors will face different costs depending purely on how they choose to pay their adviser.
Colin Jelley, head of proposition marketing at Skandia, says forcing clients who choose to spread their payments over a period of time to suffer a financial penalty "flies in the face" of the aims of the RDR.
The changes will become a major issue when the RDR is implemented and commission is eradicated, according to Skandia.
"There must be a risk many consumers and their advisers will choose the lower cost option of an up front combined intermediary and advisory fee rather than suffer an unnecessary VAT cost," says Jelley.
In the note issued on Friday, the ABI and HMRC confirm that to be exempt from VAT payment for all services - both arranging the initial investment and ongoing review services - must be made at the time the contract is entered into.
Advisers must set out the exact nature of the review services and their time-span in the initial client contract if VAT exemption is to apply.
This leaves customers forced to decide between paying the entire advice fee up front at the time of purchasing a product, or to pay it over time and suffer an additional 20% VAT cost.
Under the rules Skandia says two identical contracts, covering exactly the same basket of services, but with different cash payment dates, would attract different VAT liabilities.
Jelley says: "It is unfortunate, to say the least, that the desired separation of advisory services can only be achieved by increasing the total cost of financial advice to the consumer.
He says once commission is removed following the implementation of the RDR the VAT rules as they currently stand will create a "big problem".
"A situation where advice fees are only exempt from VAT if they are all paid up-front when a product is purchased flies in the face of how people want to pay for advice and what the RDR is trying to achieve.
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