United Biscuits (Pension Trustees) Limited v HMRC (CJEU, 8 October 2020)

The CJEU has followed the Advocate General’s earlier opinion in relation to a case regarding the VAT treatment of pension fund management services.

In 2017, the High Court had held that, as a matter of EU law, such services provided by non-insurers (companies not authorised to conduct insurance business) did not qualify for a particular VAT exemption. When the case was appealed, the Court of Appeal decided to refer certain questions of EU law to the CJEU for a preliminary ruling.


The claimants in the main proceedings were United Biscuits (Pension Trustees) Limited, the trustees of United Biscuits’ DB occupational pension scheme, and the former trustee of the UB Pension Investment Fund (a collective investment fund in which the assets of the scheme were invested between 1989 and 2006), together “the Trustees”.

The Trustees sought to recover from HMRC the VAT they had paid to various investment managers on supplies of pension fund management services between 1 January 1978 to 30 September 2013. These managers included both companies authorised to conduct insurance business (“Insurers”) and companies not so authorised (“Non-Insurers”).


 Until 1 April 2019, pension fund management services were treated by HMRC as exempt supplies when provided by Insurers, but as standard rated supplies when provided by Non-Insurers. Before 1 January 2005, this differential treatment had been in accordance with statute. Following amendment of the UK legislation with effect from that date, the difference was no longer in accordance with statute. However, HMRC continued to apply the same approach. (From 1 April 2019, HMRC created parity between Insurers and Non-Insurers, and the supply of all pension fund management services became standard rated.)

The Trustees’ case was that the supplies made by Non-Insurers were “insurance transactions” for the purposes of the Sixth Council Directive 77/388/EEC and the Principal VAT Directive 2006/112/EC (together, “the VAT Directives”) and, as a result, attracted mandatory exemption from VAT.

The Trustees argued that, as UK legislation had at all material times failed to provide for an exemption which was required by the VAT Directives, they and their predecessors had unnecessarily paid VAT to their suppliers. The Trustees claimed that they had a directly effective right to exemption, with a consequential right to recover the VAT payments they had made from HMRC.

High Court and Court of Appeal

In the High Court, Warren J found that the services provided by Non-Insurers were not exempt from VAT during the relevant period. Examining the relevant legislation and EU case law, he determined that pension fund management did not fall within the meaning of “insurance” for the purposes of the exemption in the VAT Directives. He had held that the answer to this issue was acte clair, and accordingly, there was no need to make a reference to the CJEU.

The Court of Appeal, however, held that questions of EU law required clarification, and stayed proceedings to make its reference.

AG’s opinion

The AG opined that such services were not exempt from VAT.

Interpreting “insurance transactions” by context (as there is no definition in the VAT Directives), pension fund management services did not appear to meet the criteria: the investment managers did not contract with the Trustees “to provide any form of indemnification against the materialisation of risk” so the fund management services here did “not entail any assumption of a risk by the investment managers for consideration”.

And whilst the First Life Assurance Directive (Directive 79/267/EEC) described pension fund asset management as a “class of insurance”, this did not mean that it generally constituted a life assurance activity within the meaning of the EU rules on insurance.

CJEU judgment

The CJEU agreed with the AG; investment fund management services supplied for an occupational pension scheme which do not provide any indemnity from risk cannot be classified as “insurance transactions” and so do not fall within the relevant VAT exemption. 

Some ambiguity had arisen from the fact that UK (and Danish) language versions of the First Life Assurance Directive referred to “classes of insurance” rather than “classes” of activity (as other versions did). However, the argument that pension fund management activities were therefore intended to be classified as “insurance” did not stand up to a contextual analysis. The Court noted that, in accordance with case law, “provisions of EU law must be interpreted and applied uniformly in the light of the versions existing in all the languages of the EU. Where there is divergence between different language versions of an EU text, the provision in question must be interpreted by reference to the purpose and general scheme of the rules of which it forms part”. In this case, activities were referred to in the annexes for purposes wider than simply defining what constitutes “insurance”.


The case will now return to the Court of Appeal.