VAT treatment of fund management services

Simmons & Simmons has responded to the consultation entitled “VAT Treatment of Fund Management Services” published on 9 December 2022.

As part of responding to HM Treasury’s Call for Input entitled “Review of the UK funds regime”, we conducted a wide-ranging dialogue with clients and contacts, through bilateral meetings and a series of roundtables, accompanied by a client survey. Details of this survey, and our response to the Call for Input, can be accessed here.

As regards taxation, the consistent feedback across those clients with whom we spoke, whether large institutional managers or boutiques, was that the tax framework for UK funds and fund management must be underpinned by a simple, straightforward and effective system. We therefore welcome the objective of seeking to clarify the SIF definition in UK domestic law, given the unclear position that has arisen both pre- and post-Brexit. However, we consider that, whilst positive, the limited nature of the consultation leaves certain items open, including the meaning of “management”, which is equally critical when seeking to identify the scope of the VAT exemption.

More fundamentally, consistent feedback from clients was that (a) any changes should protect the existing VAT position for UK managers of non-UK funds and (b) that as part of seeking to establish the UK as a fund, rather than a manager, domicile for internationally-marketed funds, zero-rating of management services for such funds would be a critical piece of the jigsaw.

To read our response in full, click here.