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Commission, fees and trail

Revenue in this sector arrives in shapes that a single income line cannot describe: an upfront commission on placement, an ongoing trail for as long as the client stays, an advisory fee charged directly, and a share paid away to an introducer. Netting those into one figure makes it impossible to say which relationships are actually worth having.

Recording each against the client and the product it relates to is also what makes a commission dispute answerable — and those are common enough to plan for.

Records under supervision

Regulated firms are expected to evidence what they did and when, and to produce it on request rather than reconstruct it. In practice that means:

• A durable record of every client engagement and what was charged for it.
• An audit trail showing who accessed or changed a record, not just its current state.
• Retention for the period your regulator requires, in a form that survives staff turnover.

These are the same habits that make the business legible internally; the regulatory requirement mostly just sets a deadline for acquiring them.

VAT on financial services

Some financial services are exempt from VAT and others are not, and the line runs between them in ways that are not intuitive. Exempt means no VAT charged and no input VAT reclaimable, which changes the economics of your own cost base.

A firm providing a mix of exempt and standard-rated services may need to apportion input VAT, which is genuinely technical and worth getting an adviser to set up once rather than approximating every quarter.