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With effect from 1 October 2008 a VAT exemption will
apply to supplies of fund management services to UK-listed investment
entities (including investment trust companies and venture capital trusts)
and certain overseas funds. Further guidance and draft legislation is to be
published in April 2008.
Our View
Changes to UK law were expected
following a decision of the European Court of Justice last year, which
held that the VAT exemption for fund management services should not be
applied in a discriminatory way and should therefore extend to the
management of investment trusts. HMRC now appears to accept that this
decision will also apply to venture capital trusts and certain overseas
funds. Although, this will not directly impact the funds themselves, it
will result in a significant reduction in the ability of UK fund
managers to recover input tax. We are urgently seeking clarification
from HMRC. |
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