VAT Treatment of SIPP administrator fees

Financial and Insurance services are often an area where access to a VAT Exemption will crop up for discussion. Here, in the case of the supplier - Intelligent Money Limited - their argument was that their fees for the administration of a Self Invested Pension Plan (SIPP) could be seen as a supply covered under the Insurance VAT Exemption. They were not involved in the management of any funds but these were their fees for the operation and administration of the SIPP.

The firm had originally accounted for VAT on these fees but then submitted a claim for the "overpaid" VAT which was dismissed by the First Tier Tribunal. Its appeal to the Upper Tribunal was equally unsuccessful. 

The case report can be accessed here 

As mentioned, VAT liabilities in this sector can be complex and there are always a range of aspects to consider - the case presented here suggested that the monies paid represented a "premium" in the same way as when a contract for insurance seeks to cover a potential future risk.

However, European case law has set specific criteria to be followed in this regard and the Upper Tribunal did not see that these criteria had been met. It was a service being supplied in this instance and it was outside of any VAT Exemption.

If you are affected by this ruling then do please get in touch with the Xeinadin Indirect Tax team here at Centurion - IndirectTax@Xeinadin.com 

This article is for information only and specific advice should always be sought in regard to your own situation.