HM Revenue and Customs Brief 48/08
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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
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 This follows the policy originally described in the draft guidance, now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the draft guidance has been updated pending its inclusion in the guidance
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Article Published/Sorted/Amended on Scopulus 2008-10-08 13:58:39 in Tax Articles