Saul Trustees 'bottled out' of co-leading NAPF Wheels case

During a session on the subject of class actions, Dennis Buckley, chairman of Saul Trustees, admitted Saul “bottled out” of joining the NAPF as lead plaintiffs in its ongoing VAT battle with HMRC, but was happy to “sit on the coat tails” of the NAPF to receive compensation should they be successful.  

Buckley said he had mixed emotions about the decision, but that ultimately the potential outcome of losing the case against HMRC and picking up both plaintiff and defendants' legal costs,  as is the current legal structure for group actions in the UK, was too much of a risk to bear.

The Wheels case has recently been referred to the European Court of Justice (ECJ). The dispute is over whether occupational defined benefit (DB) pension funds should have to pay VAT on investment management services. 

The NAPF hopes to use the ruling in a previous case as a precedent for why DB schemes should not pay VAT on investment management services.

In 2008, the case known as the JP Morgan Fleming Claverhouse Investment Trust ruling, also heard at the ECJ, stated investment trusts should be exempt from paying VAT on investment management services.

The challenge against HMRC has been jointly brought by the NAPF and Wheels Common Investment Fund (WCIF) together with its underlying Ford schemes, which provides pensions for Jaguar, Ford and Land Rover. The WCIF has £6bn in assets under management.

A tribunal hearing will now be held in London between the February 10-15, 2011 to allow the ECJ to interpret the scope and meaning of that exemption.

A ruling in favour of the NAPF and WCIF could mean that DB pension funds no longer have to pay an estimated £100m a year in VAT. Backdated claims covering a number of years could be made in the case of some funds.