ARTICLE · 20 OCTOBER 2011

VAT And Pensions – The Confusion Continues

Smith & Williamson

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Martin Sharratt discusses the contentious situation relating to VAT exemption for pension funds and the latest test case being considered by the European Court.

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Martin Sharratt

Martin Sharratt discusses the contentious situation relating to VAT exemption for pension funds and the latest test case being considered by the European Court.

The management of a pension fund is, in one sense, clearly a form of investment activity and from a layman's perspective it looks very much like something that ought to fall within the VAT exemption. However, as most of our clients will appreciate, VAT has its own logic and this is a subject which has confused experts and HMRC alike for decades.

Scope of exemption

The scope of the exemption is set by European legislation, which restricts the exemption for fund management services to "the management of special investment funds as defined by member states".

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