Performance Fees Subject to Value-Added Tax, UK Court Rules (1)

The UK’s top court on Tuesday rejected an appeal arguing that intra-group performance fees between companies that were once part of the same value-added tax group shouldn’t be subject to sales tax.

At issue was Silverfleet’s provision of investment management services to Prudential Assurance Company Limited. Silverfleet was compensated with both a regular management fee and performance fees. Both companies were members of the same VAT group until a management buyout in 2007. During 2014 and 2015, Silverfleet earned more than £9 million ($11.4 million) in performance fees, which were invoiced between 2015 and 2016. A VAT group allows two ...