Weekly VAT News

CCLA Investment Management Ltd: VAT exemption for management of SIFs – FTT

Under the EU Principal VAT Directive (PVD), the management of Special Investment Funds (SIFs) is VAT exempt. The First-tier Tribunal has considered whether the exemption applied to fund management services provided by CCLA Investment Management Ltd to charitable, Church of England, and local authority investment funds. (The periods in question pre-dated the end of the Brexit implementation period, 31 December 2020, and accordingly the PVD applied.) Investment funds that are constituted as Undertakings for Collective Investment in Transferable Securities (UCITS) qualify as SIFs. Funds that are not a UCITS may benefit from the SIF exemption if they are equivalent to a UCITS, or sufficiently comparable so as to be in competition with a UCITS. In this respect, the EU VAT Committee (Working Paper 936) considered that funds are sufficiently comparable if, inter alia, they are subject to “specific state supervision”, and are subject to the same conditions of competition and appeal to the same investors who would invest in a UCITS. The First-tier Tribunal has held that state supervision could be indirect, so being supervised via the fund manager was sufficient, but the supervision must be financial in nature; in the UK this would require regulation by the Financial Conduct Authority. Whether funds were subject to the same conditions of competition and appeal to the same investors must be determined on a case-by-case basis. The FTT considered each of the funds, and held that in some cases, although not all, there was the requisite state supervision and the funds were subject to the same conditions of competition and appealed to the same investors who would use UCITS. Accordingly, VAT exemption would apply to some of the management services under consideration. The FTT noted that the decision did not cover the input tax position, so the quantum of the refund to which CCLA would be entitled remained to be determined. (Contact: Nicole Faith)

Lycamobile UK Ltd: VAT treatment of mobile plan bundles – FTT

Lycamobile UK Ltd sold plan bundles to customers in the UK comprising rights to future telecommunication services, that is, telephone calls, text messages, and data. Lycamobile considered that for VAT purposes services contained within the plan bundles were only supplied as and when the services were used, not when a customer purchased a plan bundle. The First-tier Tribunal has disagreed, agreeing with HMRC that VAT was chargeable on the entire consideration paid on the sale of a plan, even if the allowances in the plan bundle were never used. The case concerned the VAT periods from 07/12 to 08/19. Prior to 1 November 2017, supplies of business-to-consumer (B2C) telecommunication services were not subject to UK VAT to the extent that they were effectively used and enjoyed outside the European Union. Accordingly, Lycamobile should be able to make a VAT adjustment to reflect any non-EU roaming charges. The FTT also held that the plan bundles were not vouchers, so the VAT rules relating to vouchers did not apply. Therefore, VAT was due on the entirety of the amount paid for plan bundles, even if part of the bundle was unused, with a potential adjustment for non-EU roaming charges pre-1 November 2017. (Contact: Nicole Brook)

Deloitte VAT School 2024

Deloitte VAT School is a comprehensive VAT training programme that provides participants with practical VAT knowledge and helps them become more effective in their role. Taking place in Deloitte’s London office, there are four modules held monthly from September through to December. Deloitte VAT School is suitable for a range of attendees, from FDs looking for a better understanding of the intricacies of the VAT system, to AP/AR staff to aid their day-to-day responsibilities. The price is £3,150, plus VAT, for sessions 1 to 4, with a 15% discount for bookings of three or more places from the same organisation, and a discount of 10% for those who book before 2 August 2024. For more information and to register, visit the Deloitte VAT School 2024 webpage. (Contact: Andrew Clarke)