On the go: The trustees of United Biscuits’ defined benefit pension scheme are waiting for a final ruling from the Court of Justice of the European Union, after the advocate general sided with HM Revenue & Customs on a long-lasting battle on value added tax.
Until April 2019, pension fund management services were treated by HMRC as exempt when provided by insurers, but were standard rated when provided by non-insurers. This was according to statute until January 2005, but was amended in the UK legislation with effect from that date.
However, HMRC continued to apply the same approach for several years, until it announced in 2017 that the exemption would be removed.
The trustees argued that the services provided by non-insurers were “insurance transactions” according to certain directives, and were therefore exempted from VAT. They argued that they had the right to recover the VAT payments from HMRC.
The case reached the High Court in 2017, which held that, as a matter of EU law, such services provided by non-insurers did not qualify for a particular VAT exemption.
The case was then appealed, but the Court of Appeal decided to refer certain questions of EU law to the CJEU for a preliminary ruling.
In an opinion issued in May, advocate general Priit Pikamäe confirmed the High Court ruling, stating that the insurance exemption from VAT did not apply since the pension fund management services in question did “not entail the assumption of any risk by the investment managers”.
The case will now go on to the CJEU for its answer, before returning to the Court of Appeal, explained Katharine Swire, senior associate at Sackers.
She said: “The CJEU is not bound by the AG’s opinion. However, if it reaches the same conclusions, as we might expect in this case, then upon its return to the Court of Appeal that seems likely to be the end of the United Biscuits saga.
“While disappointing for the schemes involved – and the many that have followed it, with a vested interest – such an outcome would now not be surprising.”
