Investment Management costs and VAT
The Court of Appeal’s judgement in the case of the Chancellor, Masters & Scholars of the University of Cambridge was released at the end of March.
HMRC’s view was that no VAT could be recovered on such costs because they related to the management of the University’s investment portfolio which did not result in the making of taxable supplies.
The University’s case was that the funds generated unrestricted funding which was used to subsidise all of the University’s activities which included making both taxable and exempt supplies and that the costs should therefore be treated as an overhead cost and be partly recoverable in accordance with the University’s VAT recovery position.
Surprisingly, the Court of Appeal has decided to refer the matter to the European Court of Justice, so there must now be a concern that the Court will agree with HMRC that VAT is not recoverable on such costs after two convincing wins for the taxpayer at the First and Upper Tier Tribunals.
Taxpayers who have been claiming back VAT on their investment management portfolios should consider their position pending conclusion of the litigation on this matter.
If you should have any questions relating to the Court of Appeal’s judgement in the case of the Chancellor, Masters & Scholars of the University of Cambridge, then please do not hesitate to contact Phil Salmon, Partner and Head of VAT, or your usual haysmacintyre adviser.