Draft fund management fees law published
4 Aug 08
Following the JP Morgan Fleming Claverhouse Trust case concerning the VAT treatment of some fund management services, HMRC has published draft law, an explanatory memorandum and some draft guidance on how the judgment will be put into effect
In summary, JP Morgan Fleming Claverhouse Trust argued that fees for investment management services to investment trust companies (ITCs) should be exempt from VAT.
The EC VAT Directive exempts fees for the “management of special investment funds as defined by member states”. UK law applied the exemption to AUTs, OEICs and trust-based schemes, but not other funds.
The European Court of Justice decided, among other things, that on the basis of fiscal neutrality, ITCs were similar to funds that qualified for the exemption.
The draft law should come into effect on 1 October 2008 and amends Group 5, Schedule 9 VATA 1994.
Five new categories will be added to the definition of investment funds whose management falls within the exemption.