The European Court of Justice (ECJ) is today examining whether workplace defined benefit pension funds should have to pay VAT on investment management services. Pension schemes could save about £100m a year in VAT if the Court agrees that the fees should be exempt.
The ECJ is considering the case after a Tribunal hearing held in London in February last year decided that the ECJ should interpret the scope and meaning of the VAT exemption.
The National Association of Pension Funds (NAPF) and Wheels Common Investment Fund (WCIF), with its underlying Ford schemes, have been fighting a long running legal battle which was initiated in 2008 following a JP Morgan Fleming Claverhouse Investment Trust plc ruling in the ECJ. This case stated that investment trusts were special investment funds and should be exempt from paying VAT on investment management services.
If the ECJ rules in favour of the NAPF and WCIF, defined benefit pension funds would no longer have to pay an estimated £100m a year in VAT. Some funds could also make backdated claims covering a number of years.
Joanne Segars, NAPF’s Chief Executive, said:
“This has been a long battle, and we are delighted that the case is now being heard by the European Court of Justice.
“We feel that we have a strong case. Defined benefit pension funds should not have to pay VAT on investment management services. A ruling in our favour would benefit the members of the pensions by cutting running costs and increasing the funds available for investment.”
The formal hearing took place at 11.30am (CEST).
Notes to editors:
1. The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,300 pension schemes with some 16 million members and assets of around £900 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.
Christian Zarro, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, [email protected]