Following a long legal battle there is good news for AITC, Investment trust groups in general, and JPMorgan Claverhouse Investment Trust following the European Court of Justice ruling in their favour. The European Court of Justice confirmed that management expenses for investment trusts should be exempt from VAT.
The case was brought against the HM Revenue and Customs in January 2004 and it was the interpretation of the European Union’s sixth VAT directive that prompted the action. The case was referred to the European Court of Justice in September 2005 and last month; the European Court of Justice published its results. The results were not in the HM Revenue and Customs favour, by commenting that the exclusion of investment trusts does not appear justified. AIC and JPMorgan Claverhouse Investment Trust are now calculating how much the new ruling will save them and how much they have overpaid in VAT over the years.
Our view
Yet again HM Revenue and Customs have been ruled against by the ECJ. This is all too common for HMRC to be overruled. We live in one of the highest taxed countries on the planet.