INTELLIGENT MONEY LIMITED v THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS [2023] UKUT 00236 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Rajah,Judge Ashley Greenbank |
| Subject Matter | 26 September 2023 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 26 September 2023 |
Neutral Citation: [2023] UKUT 00236 (TCC) Case Number: UT/2022/000093
UPPER TRIBUNAL
(Tax and Chancery Chamber) Royal Courts of Justice, Rolls Building,
Fetter Lane, London EC4A 1NL
VAT – fees paid to the administrator of a self-invested personal pension (SIPP) – whether fees
are consideration for an insurance transaction within Group 2 Schedule 9 Value Added Tax
Act 1994 – no – appeal dismissed
Heard on: 13 and 14 July 2023
Judgment date: 26 September 2023
Before
MR JUSTICE RAJAH
JUDGE ASHLEY GREENBANK
Between
INTELLIGENT MONEY LIMITED Appellant
and
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Respondents
Representation:
For the Appellant: David Bedenham, counsel, instructed by the Appellant
For the Respondents: Andrew Macnab, counsel, instructed by the General Counsel and
Solicitor to His Majesty’s Revenue and Customs
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DECISION
INTRODUCTION
1. This is an appeal by the appellant, Intelligent Money Limited (“IML”), against a decision
of the First-tier Tribunal (the “FTT”) dated 5 May 2022 with neutral citation [2022] UKFTT
0338 (TC) (the “FTT Decision”) dismissing a claim by IML for repayment of VAT overpaid.
The respondents are the Commissioners for His Majesty’s Revenue and Customs (“HMRC”).
2. The appeal concerns the liability to VAT of services provided by IML in connection with
the provision, operation and administration of self-invested personal pension schemes
(“SIPPs”), and, in particular whether those suppl ies fall within the exemption from VAT for
“insurance and reinsurance transactions” contained in item 1 Group 2 Schedule 9 to the Value
Added Tax Act 1994 (“VATA”).
3. Item 1 Group 2 Schedule 9 VATA implements article 135(1)(a) of Council Directive
2006/112/EC (referred to as the “Principal VAT Directive” (“PVD”)), which provides for the
exemption of “insurance and reinsurance transactions, including related services performed by
insurance brokers and insurance agents”. It is no part of either party’s case that the provisions
of Group 2 Schedule 9 VATA do not properly implement article 135(1)(a) PVD. We have
referred to the exemption from VAT provided by item 1 Group 2 Schedule 9 VATA and article
135(1)(a) PVD as the “insurance exemption” in this decision.
4. The FTT decided that the services provided by IML did not fall within the insurance
exemption and dismissed IML’s appeal. IML appeals to this tribunal with the permission of
the FTT.
THE FACTS
5. The facts are not in dispute. They were set out by the FTT at paragraphs [7] to [36] of
the FTT Decision. We gratefully adopt the FTT’s summary, which we have set out below.
The Intelligent Money SIPP
7. The contractual documentation which must be considered to determine the
nature and liability of the supplies made by the Appellant consists of:
(1) An application form completed by a prospective member of the scheme
(2) A fee schedule
(3) The terms and conditions of the scheme
(4) The key features document (required to be provided under the regulatory
provisions governing the provision of pensions)
(5) The trust deed and rules of the SIPP
8. A copy of the composite document comprising the first 4 contractual
documents is annexed to this judgment.
1
9. The parties took the Tribunal to the provisions of these documents at
considerable length. The Tribunal has carefully considered all the terms
referenced by each of the parties. However, for the purposes of this judgment
the Tribunal does not propose to quote from the documents at length.
10. At the outset it is to be noted that the defining characteristic of a SIPP,
including that offered by the Appellant, is that the contractual holder/their
1
A copy of this document is also annexed to this decision notice.
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financial advisor (and not the Appellant) is responsible for the management of
the funds held in the member's SIPP.
11. It is also significant that the SIPP is established so as to meet the detailed
and specific requirements of the Finance Act 2004 (“FA 2004”), pursuant to
which members may, subject to those requirements, save for their retirement
in a tax efficient manner. Further detailed rules are imposed on the operation
of the SIPP pursuant to the Pensions Act 2008 (“PA 2008”) . The rules place
particular limits on when and how payments can be made from the SIPP to
either the member or other beneficiaries. There are also certain restrictions on
the level of contributions which can be made to the SIPP in respect of which
tax relief can be claimed. The detail of these requirements is not relevant to
the issue to be determined in this appeal. The Appellant's commitment to the
investing members that the SIPP will be managed so as to preserve the tax
effective status of the regime is, however, highly relevant.
Application form
12. An individual who wants to apply to become a member of the IM SIPP
will complete the application form and provide their personal details together
with what is referred to as an expression of wish as to "those people that [they]
would like to receive any remaining benefits payable under the Intelligent
SIPP on [their] death". It is noted that "This agreement does not bind the
trustees of the scheme but is a means to help the trustees pay out [the] benefits
in line with [the member's] wishes". The applicant warrants that they
understand the non-binding nature of the expression of wishes in the
declaration section.
13. Much of the detail requested to be provided ensures that the applicant is
eligible for tax relief on contributions proposed to be made to the SIPP and
ensure that the pension provided meets the requirements of FA 2004.
14. The application form includes a number of declarations (again many
driven by the requirements of either the PA 2008 or FA 2004) including a
declaration which has the contractual effect of incorporating the terms and
conditions, fee schedule and deed and scheme rules such that the applicant
(who becomes a member of the IM SIPP) is bound by their terms.
15. The applicant also declares that they are solely responsible for all
decisions relating to the purchase, retention and sale of all investments within
the SIPP and that the value of the SIPP may only be applied to provide benefits
in accordance with the scheme rules.
Fee schedule
16. The fee schedule provides for specific fees to be payable. Every member
is required to pay an annual fee of £150. Further fees are payable for instance
where the member wishes to make an in-specie contribution/transfer, transfers
out, on the commencement of payment of benefits, interim valuations, non-
platform investment transactions, banking fees and in respect of property
transactions. The majority of these latter fees are charged per hour.
17. Annual fees are stated to be for the "provision, establishment and ongoing
operation of [the member's] pension plan". Annual fees are payable in advance
and may be met from the member's cash account or from the liquidation of
funds within the SIPP.
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