The decision in the University of Cambridge case confirms that universities and other partially exempt entities, with investment funds that derive income or capital for the benefit of their overall economic activities, should be able to recover part of their input VAT in relation to fees charged by the fund managers. Rejecting HMRC’s arguments, the Upper Tribunal upheld the university’s submission that the relevant question was whether its investment activity through its endowment fund was carried out for the benefit of its economic activity in general. As that was held to be the case, the cost of the fund’s supplies constituted overheads and a component part of the price of the university’s products.
