The first claimant, the trustee of a defined benefit occupational pension scheme, and the second claimant, the former trustee of a collective investment fund in which the assets of the pension scheme were invested for a period, sought to recover from the commissioners VAT which they had paid to various investment managers. Their case was that the supplies made by non-insurers were insurance transactions for the purposes of Council Directive 77/388/EEC, article 13B(a) and Council Directive 2006/112/EC, article 135(1)(a) (“the Principal VAT Directive”) and attracted mandatory exemption from VAT. However, UK legislation at all material times failed to provide for the exemption required by those Directives. The trustees and their predecessors had paid VAT to their suppliers which should not properly have been payable. They claimed that they had a directly effective right to exemption with a consequential right to recover from the commissioners the VAT which they should never have been obliged to pay. The commissioners’ primary case was that the supplies by non-insurers were not insurance transactions within the meaning of the VAT Directives did not attract the exemption under those Directives; that the supplies were therefore properly standard rated and VAT was correctly paid in accordance with UK law.
On the claim—
Held, claim dismissed. Pension fund management services provided by the non-insurers did not fall within the exemption provided by article 135 (1)(a) of the Principal VAT Directive as “insurance transactions”. As a matter of EU law, the pension fund management services were not exempt from VAT during the relevant period (paras 82, 89, 100).
David Scorey QC and Michael Jones (instructed by PricewaterhouseCoopers llp) for the claimants.
Andrew Macnab (instructed by Solicitor, Revenue and Customs) for the commissioners.