The National Association of Pension Funds (NAPF) has urged its members to put pressure on the taxman in a bid to force a VAT overhaul.

After a key ruling was handed down by the European Court of Justice affording investment managers VAT relief on pension scheme services, the NAPF is pushing for pension funds to jointly finance a legal challenge so that the same benefits apply in the other direction.

NAPF chief executive Joanne Segars, said: 'After the clarification from the ECJ, there is a strong case that pension funds should not have to pay VAT on investment management services. Instead, they would be able to use these savings to benefit their members.'

The NAPF's move has been made in response to the ECJ's judgment on the JPMorgan Claverhouse case, which found that VAT exemption should extend to investment management services provided to occupational pension schemes.

The NAPF added: 'Litigation is never without risk and it would be expensive for any one pension fund to finance a legal challenge on its own. But if a number of funds agree to share the costs, they could get their money back several times over. Ultimately, it is for pension funds to decide whether they want to challenge HMRC. If we get enough interest from our members, we will co-ordinate a case.'

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