VAT fund management exemption

The Value Added Tax (Finance) Order, SI 2020/209, provides for the VAT fund management exemption to apply to pension funds that meet certain critieria, and removes the requirement for certain funds to invest wholly or mainly in securities for the exemption to apply. The order comes into force on 1 April 2020.

In the years following the 2014 decision of the CJEU in ATP Pension Service (Case C-464/12), HMRC gave businesses the option to either exempt fund management services in accordance with EU law, or to apply UK VAT legislation.

In January 2019, the government decided to align UK law with EU law in the Value Added Tax (Finance) (EU Exit) Order, SI 2019/43. In June 2019, faced with uncertainty around the date of the UK’s exit and in order to give the industry more time to prepare, the government revoked that order with the Value Added Tax (Finance) (EU Exit) (Revocation) Order, SI 2019/1014. The government confirmed at that time its intention to introduce the same changes in a new order, but with a certain commencement date of 1 April 2020.