CCLA: AIFs can qualify for the SIF VAT exemption

The First-tier Tribunal in CCLA Investment Management Ltd v HMRC has held that fund management services supplied to certain charity funds fell within the scope of the VAT exemption for management of special investment funds (SIFs) such that overpaid output VAT can be recovered from HMRC. The FTT considered the requirement for a fund to be subject to ‘specific State supervision’ and disagreed with HMRC’s view that it must be directly regulated by the Financial Conduct Authority. Adopting an approach of functional equivalence, Authorised Investment Funds can constitute SIFs, at least for pre-Brexit periods, provided that the fund is subject to the same conditions of competition and appeals to the same circle of investors as UCITS funds.