Charities and other VAT-averse organisations should note the decision of the Upper Tribunal in the case of Cambridge University Endowment Fund which was released this summer.
The case concerned recovery of VAT incurred on investment management fees.
The Upper Tribunal found that, whilst investing money is in itself a non-business activity, the University’s investment activity was undertaken in support of all of its activities – both business and non-business.
As a result, to the extent that VAT on these costs could be attributed to the University’s taxable business activities, it could be reclaimed.
This decision has potentially significant implications for other organisations who have incurred such costs on a similar basis. Some commentators have suggested that potential reclaims in the charity sector could run to tens of millions of pounds.
Any organisation who has incurred VAT on these costs and has not claimed the recoverable proportion would be well-advised to consider submitting a retrospective claim (covering the last four years) as soon as possible.