VAT - Financial Services Outsourcing
HM Revenue & Customs changes its policy with respect to the VAT exemption
for the management of authorised collective investment schemes

Submitted by Baker McKenzie

Contact
Michael Mensik (312) 861 8941
George Kimball (619) 235 7781
www.bakernet.com/outsourcing

Abstract
HM Revenue & Customs ("HMRC") has announced that it has changed its policy in relation to the exemption from value added tax for the management of authorised collective investment schemes. The changes attempt to bring HMRC's policy into line with the judgment of the European Court of Justice (the "Court") in Case C-169/04 Abbey National Plc & Inscape Investment Fund v Commissioners of Customs and Excise ("Abbey National"). The announcement, which represents a significant climb-down by HMRC after its long-running dispute with Abbey National, has significant implications for funds and suppliers of fund management services. A wide range of management and administration services provided to funds, which were previously taxable, will now be exempt from VAT. The new policy will also introduce a welcome degree of flexibility for funds and third party managers when negotiating their outsourcing arrangements.

Download Complete Client Alert Now