Practical application of the VAT exemption for fund management
Produced in partnership with Martin Shah of Simmons & Simmons and Gary Barnett of Simmons & Simmons

The following Tax practice note produced in partnership with Martin Shah of Simmons & Simmons and Gary Barnett of Simmons & Simmons provides comprehensive and up to date legal information covering:

  • Practical application of the VAT exemption for fund management
  • The VAT exemption for financial services
  • The exemption for fund management
  • Are the services ‘management’?
  • Outsourcing
  • Portfolio management
  • Investment advice
  • Administrative management
  • Am I managing a ‘special investment fund’?
  • Closed-ended funds
  • More...

Practical application of the VAT exemption for fund management

FORTHCOMING CHANGE for UK funds: At Budget 2020 the government announced a review of the UK funds regime including the VAT treatment of fund management fees. A general review was launched on 26 January 2021 and closes on 20 April 2021. The commencement of the VAT review has been delayed as a result of revised priorities within HMRC to deal with the consequences of the coronavirus (COVID-19) pandemic and is expected to follow later in 2021. For more detail, see News Analysis: Spring Budget 2020—Tax analysis—VAT on fund management.

The VAT exemption for financial services

The UK VAT exemption for financial services is based on the relevant provisions of Council Directive 2006/112/EC (the VAT Directive). These have been enacted into UK law by Schedule 9, group 5 to the Value Added Tax Act 1994 (VATA 1994), which sets out a number of items falling within the exemption.

This Practice Note provides an overview of a number of practical considerations relating to the VAT exemption for the management of special investment funds (items 9 and 10 of group 5).

For more details on the specific definitions and requirements of this exemption, see Practice Note: VAT exemption for fund management.

This Practice Note includes references to EU Directives and case law. The UK ceased to be an EU Member State on 31

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