Following the European Court’s judgment in ATP it would be reasonable to think that we had reached the end of the road on the VAT treatment of management services provided to pension funds. To date there has been a mixed bag of results with the Court holding in Wheels that the supply of management services to a DB pension scheme was subject to VAT whilst holding in ATP that the supply of management services to a DC pension scheme could be VAT exempt (see our recent ATP post).
However, just when you thought that it was safe to go back in the water, we have come across a further potential line of litigation which may reignite this whole issue. Currently the supply of management services by an insurance company to a pension scheme is VAT exempt (because of a specific VAT exemption). VAT law is subject to the EU construction principle of “fiscal neutrality” which means that taxpayers in objectively similar situations should be treated the same way for VAT. And so the argument goes that a pension fund which receives management services from a non-insurance company should be in no worse a position than a fund which receives such services from an insurance company.
It will be interesting to see how, if at all, litigation develops on this point. Perhaps the wheels have not fallen off the litigation wagon after all!