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13-May-08 11:30 [Pensions]
HMRC facing legal challenge HM Revenue & Customs (HMRC) is facing a £300 million legal battle over the application of VAT on investment management fees supplied to occupational pension funds.
Claiming that HMRC is in breach of European tax law, the National Association of Pension Funds (NAPF) and the Wheels Common Investment Fund (WCIF) have joined forces to take their grievances to court.
The chief executive of NAPF, Joanne Segars, claims that the joint initiative has a good chance of being successful in court.
"After last years ECJ (European court of justice) judgement there is a strong case that defined benefit occupational pension funds should be exempt from paying VAT on investment management services," she said.
The WCIF manages £8 billion in assets, including the retirement funds of Land Rover, Jaguar and Ford.
If the challenge is successful then pension schemes could make an annual saving of £100 million a year in VAT on management fees.
The NAPF represents the interests of over 1,300 members.
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