Statement
I am today publishing the government’s response to the consultation on the VAT treatment of fund management services that was launched in December 2022 and closed on 3 February 2023.
The consultation set out how the government intended to achieve the twin aims of: (i) improving policy clarity and certainty for all stakeholders on the application of the VAT exemption for fund management services; and (ii) removing reliance on retained EU law.
The government has fully considered the consultation responses and the outcomes of additional stakeholder discussions.
This response document sets out that businesses will not be able to rely on direct effect of EU law after 31 December 2023 when the Retained EU Law (Revocation and Reform) Act 2023 comes into effect. The VAT exemption for the management services of those funds listed under Items 9 and 10 of Group 5, Schedule 9 of the VAT Act 1994 will remain in place. This approach is in line with respondents’ views, and meets the stated aims of providing clarity, certainty, and simplicity.
HMRC will issue updated guidance to reflect this change in the coming months. The government will continue engaging with interested businesses.
The government thanks respondents to this consultation for taking the time to share their views.
The consultation response can be found at VAT treatment of fund management: consultation - GOV.UK (www.gov.uk).
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This statement has also been made in the House of Lords