Further to my colleague Roger’s comments in his blog of 30 April 2007, the High Court has recently overturned the Tribunal’s decision in part. The decision of the High Court was that the “enrolment fee” paid by members at the first meeting could be apportioned to reflect the printed matter element (zero rated leaflet/books etc). However, the fees paid for the subsequent weekly meetings were consideration for a single supply of “weight loss management services” which is standard rated.

The taxpayer appealed the decision in relation to subsequent meetings and HMRC cross appealed in relation to the first meetings. The Court of Appeal has recently issued its judgement which confirms that all fees paid by members are standard rated as a single supply.

This case demonstrates that it is becoming increasingly difficult to apportion income in cases of “apparent” mixed supplies.

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We reported in our blog of 16 April that there was likely to be further litigation in relation to whether pension funds should benefit from VAT exemption in relation to investment management services.

It has now been announced that the National Association of Pension Funds (“NAPF”) and Wheels Common Investment Fund (Ford/Jaguar/Land Rover group pension fund) will bring a joint challenge against HMRC at the tribunal. If this challenge succeeds, pension funds could submit VAT refund claims for the past 3 years and also for the period 1990 to 1996 in the light of the recent House of Lords Judgement in the Fleming and Conde Nast cases. The main beneficiaries will be private sector defined benefit pension schemes with segregated investments.

As previously advised, these pension funds should be discussing this issue with their fund managers and submitting protective claims as appropriate. Any rejected claims should be re-submitted to stand behind this appeal.

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