AIC wins ?300m VAT test case against HMRC

The investment industry could expect recovery from
HM Revenue & Customs (HMRC) of VAT paid
in the past of up to £300m after
of Investment Companies
(AIC) and JP Morgan Claverhouse Investment Trust
formally won a lengthy legal test case against HMRC that investment trusts
should be exempt from VAT on management expenses.

After HMRC’s withdrawal from AIC’s appeal to the UK VAT Tribunal, HMRC has
effectively accepted the European Court of Justice’s judgment of 28 June. The
news paves the way for the investment trust industry to press ahead with the
recovery of VAT paid in the past as well as a future annual saving to the sector
of about £40m a year.

The AIC said it would urge HMRC to pay out the back claims without delay. The
AIC expects the government to consult on the changes to the UK VAT law following
the victory. AIC said it would be calling on the Government to use this
opportunity to extend the VAT exemption to venture capital trusts as well.

Sir Michael Bunbury, JPMorgan Claverhouse Investment Trust chairman, said:
‘We are delighted that we have now officially won. JP Morgan Claverhouse
suffered £460,000 in irrecoverable VAT last year. In future, this money,
together with refunds relating to earlier years, should be available for
shareholders. The benefit will compound into the future and further enhance
shareholder value.”

Further reading:

Taxman wins again in residence attack

Ruling paves way for taxpayers to sue HMRC

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