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European Court rules that VAT on fund management costs are not recoverable as overhead costs of the University of Cambridge

  • United Kingdom
  • Tax planning and consultancy - Briefings


The European Court of Justice has determined that the VAT on the costs of management of the investment fund held by the University of Cambridge are not recoverable as input tax.

The University argued successfully before the lower court on the basis that the costs of management of the fund were overhead costs, as the income generated by the fund was used to finance the whole of the University’s activities, allowing certain goods and services provided by the University to be reduced. On this basis the University sought a reclaim of the VAT on its fund management costs. HMRC strongly disputed this claim. HMRC secured an appeal to the Court of Appeal, which sought a reference to the European Court on the scope of the right to deduct input tax. The European Court has held that, even though the income from the fund subsidises certain goods and services supplied by the University, the fund management costs are not incorporated into the price of any particular output transactions of the University and are not part of the University’s overheads.


See link to the case here.