Font Size

HM Revenue and Customs Brief 48/08

 By

HM Revenue and Customs -Tax Authorities

Tax Articles
Submit Articles   Back to Articles

Issued 1 October 2008

VAT: Exemption for fund management services

Changes to the VAT exemption for fund management services from 1 October 2008 were announced at this year’s Budget in BN74. The Value Added Tax (Finance) Order 2008 (SI 2008/1892) was laid in July to effect these changes.

Following further representations and consultation with stakeholders, the Order has been replaced to clarify the scope of certain of the changes and to introduce a de minimis provision. These amendments concern fund management services in respect of 'recognised overseas schemes' which are collective investment schemes established outside the UK, but are 'recognised' by the Financial Services Authority in order for them to be marketed within the UK.

The first change concerns funds which are constituted as 'umbrellas' containing a number of distinct sub-funds. In such a case, only management services provided in respect of each sub-fund marketed to UK investors are exempt. This follows the policy originally described in the draft guidance, now updated, and this is now made clear in the amended legislation.

The second change introduces a de minimis provision, whereby the management of a recognised overseas scheme (or each sub-fund if an umbrella), which is not for the time being marketed in the UK, and has never been marketed in the UK, or has less than 5 per cent of its shares or units held by, or on behalf of, UK investors falls outside the VAT exemption.

The Value Added Tax (Finance) (No.2) Order 2008 makes these changes and the draft guidance has been updated pending its inclusion in the guidance manuals.


About the Author

© Crown Copyright 2008.

A licence is need to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs under the terms of a Click-Use Licence. Tax briefs are updated regularly and may be out of date at time of reading.



Follow us @Scopulus_News

Article Published/Sorted/Amended on Scopulus 2008-10-08 13:58:39 in Tax Articles

All Articles

Copyright © 2004-2019 Scopulus Limited. All rights reserved.