HM Revenue and Customs Brief 58/07
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Issued 22 August 2007
VAT: Claims in respect of fund management services
This Revenue & Customs Brief sets out HMRC’s current position concerning
claims made in respect of VAT charged on fund management services.
The EC VAT Directive (formerly the Sixth Directive) exempts 'management of
special investment funds as defined by member states'. The UK applies this
exemption to the management of authorised unit trusts (AUTs), open-ended
investment companies (OEICs) and trust-based schemes. The UK has not applied
this exemption to the management of other funds, including investment trust
In 2004, JP Morgan Fleming Claverhouse Trust plc, an ITC, appealed to the VAT
Tribunal against the VAT charged to it on investment management services. This
appeal was joined by the Association of Investment Trust Companies (now the AIC)
and the Tribunal referred 3 questions to the European Court of Justice (ECJ). In
its judgment of 28 June 2007, the ECJ has given guidance to the Tribunal to
determine whether the management of ITCs should be VAT exempt.
Claims concerning the management of ITCs
We have received a number of claims for overpaid VAT on the management of
ITCs since the litigation began in 2004. The claims concerning such services
have been held over pending the final outcome in the litigation, and will be
addressed in due course.
Claims concerning the management of funds other than ITCs
Since the ECJ judgment, we have also received a number of claims for overpaid
VAT in respect of the management of other funds not at issue in the litigation.
Such claims have generally contained a request that they be held pending the
final outcome in the JP Morgan Fleming Claverhouse case, using the ECJ judgment
as support for the claims.
We take the view that this case does not concern the management of funds
other than ITCs and that the ECJ judgment is clear in that it does not address
the issues that arise concerning such other funds. There is thus no basis for
HMRC to accept these claims, nor any current litigation against which to justify
holding over the claims. Accordingly, any such claims in respect of the
management of funds other than ITCs will be refused. This is in line with our
existing published guidance (see paragraph 2.7 of 'V1 - 33: VAT refunds - unjust
enrichment - statutory interest - ex-gratia payments').
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© Crown Copyright 2007.
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Article Published/Sorted/Amended on Scopulus 2007-08-28 23:35:03 in Tax Articles