HMRC GfC20 Clarifies VAT Treatment of Outsourced Fund Management Services

• HMRC has published GfC20 on VAT treatment of outsourced fund management services, giving its recommended approach to deciding whether such arrangements are single supplies or multiple supplies.
• The guidance does not change the law, but clarifies how HMRC expects businesses to evidence VAT treatment based on commercial and economic reality, not just contract wording.
• For the fund management VAT exemption to apply, the service must be a distinct whole, specific to and essential for managing a qualifying fund; purely physical or technical services will not qualify.
• The single vs multiple supply analysis matters because a single supply has one VAT liability and cannot be split between qualifying and non-qualifying funds; multiple supplies can be assessed separately.
• HMRC says businesses should consider indicators such as the number of suppliers, the typical customer’s perspective, and the contractual terms/economic reality when classifying outsourced fund management arrangements.

Source: crowe.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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