10 December 2018 - Article
An appeal was brought by, amongst other parties, Wheels Pension Fund. This was brought in the wake of a decision to the effect that the exemption for management of special investment funds should include any funds that have similar characteristics to unit trust based investment funds which were open to the public. The European Court took the view that pension schemes were not open to the public but were provided by employers to employees. Furthermore, in the case of a final salary scheme the employee suffered no investment risk. Therefore, there was no case under ‘fiscal neutrality’ to afford the same tax benefit to the management of pension funds as to special investment funds.
The impact of this on charities will be that the cost of running their pension schemes will not be reduced by a windfall repayment of VAT from the pension fund managers as many might have hoped.