Pension fund management services provided by non-insurers

The United Biscuits pension scheme trustees claimed repayment of VAT which they had paid to various investment managers some of whom were insurers and others non-insurers. HMRC treated pension fund management services as exempt supplies when provided by insurers but as standard rated when provided by non-insurers. Until 1 January 2005 the different treatment had been in accordance with UK law. This was amended so that it was no longer lawful but HMRC continued with its previous practice.

The trustees said the supplies made by non-insurers had been insurance transactions for the purposes of the Sixth Directive and the Principal VAT Directive and should be exempt from VAT. However UK legislation had failed to provide for the exemption required by the VAT directives.

The High Court held that the management of group pension funds did not within the exemption and dismissed the taxpayers’ appeal. The Court of Appeal...