VAT & Pension Funds - ECJ rules in favour of HMRC
On 7 March 2013 the much anticipated judgement of the European Court of Justice ("ECJ") in the case of Wheels Common Investment Fund Trustees Ltd v HMRC was released.
The long running case was commenced following the ECJ's judgment in the case of JP Morgan Fleming Claverhouse Investment Trust plc that investment trusts were special investment funds and should be exempt from VAT on investment management services provided to them. Following this case National Association of Pension Funds together with Wheels Common Investment Fund brought a case against HM Revenue & Customs on the belief that pension funds should be entitled to a similar exemption.
The ECJ in the Wheels case has judged that defined benefit pension funds are not special investment funds and are therefore not exempt from paying VAT on investment management services.
This is a major blow for defined benefit pension funds, as it means they will have to continue to incur a VAT cost on investment management services. In addition, they will not be entitled to make backdated claims to 1990 estimated to have been worth £2bn.
If wish to discuss the impact the Wheels judgement will have on your business please contact one of the VAT specialists listed below or your local VAT contact at Mazars LLP
VAT Specialists