The High Court has ruled that two trustees of Cadbury Ireland pension funds received investment management services for the purposes of a business, upholding the relevant decision of an Appeal Commissioner on a question of law.
The case concerned VAT assessments for 1996 to 2001. The Revenue Commissioners said the trustees were liable for VAT under the reverse charge rules on services supplied by Baillie Gifford Overseas Limited, which was established in Scotland. The trustees accepted an earlier finding that the services had been supplied to them, rather than to Cadbury Ireland Plc.
The Appeal Commissioner found that the services were received for the purposes of a business and that a pension fund was a business or economic activity. The Commissioner referred the legal question to the High Court in a case stated under tax legislation.
The trustees argued, among other things, that managing pension schemes was not a business activity and that they received no consideration for carrying out their trustee functions. The court rejected the latter submission. It found that the trustees’ management and administration costs were recouped through Cadbury’s contributions under the trust deeds. The court said the trustees were paid for their functions in substance, even though payment was not made as a direct fee to them.
The judge assessed the trustees’ activities as a whole, including investment transactions, receiving contributions and income, paying pension benefits and carrying out administrative and accounting work. Applying criteria for identifying a business activity, the court concluded that the trustees’ work was a continuous and substantial undertaking conducted on recognised business principles, involving services for consideration of a kind commonly provided commercially.
The court answered the question of law by holding that the Commissioner’s decision—that the services were received for the purposes of a business—was correct in law. The judgment did not itself set out a separate order calculating or confirming the amount of VAT payable under the assessments.