Investment advice exempt from VAT — except for defined-benefit pension funds

In the case of Wheels Common Investment Fund Trustees Ltd and others v HMRC (Wheels), the Court of Justice of the European Union (CJEU) has held that management services provided to a fund in which the assets of defined-benefit pension schemes are pooled for investment purposes are not exempt from VAT, as such a fund does not constitute a ‘special investment fund’ for the purpose of the VAT exemption.

Wheels are the trustee of a fund in which the assets of defined benefit pension schemes set up by Ford Motor Company (Ford) are pooled for investment purposes in order to meet Ford’s obligations under national legislation and collective agreements (the Fund). Capital International Limited (CIL) provided management services to the Fund and initially charged and accounted for VAT on its services.

Following the decision in Claverhouse, CIL sought to reclaim the VAT accounted for in respect of the management services provided to the Fund on the grounds that the services supplied were exempt under Article 135(1)(g) of the Principal VAT Directive (Article 135(1)(g)). HMRC refused the claim and Wheels appealed to the First-tier Tribunal…

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