The Prudential Assurance Company Ltd (Appellant) v Commissioners for His Majesty's Revenue and Customs (Respondent)

Hearing listed

Case summary
Appeal
Change log

Case summary

Case ID

UKSC/2024/0065

Parties

Appellant(s)

The Prudential Assurance Company Ltd

Respondent(s)

Commissioners for His Majesty's Revenue and Customs

Issue

Is the effect of section 43 of the Value Added Tax Act 1994 that no VAT is chargeable on an intra-group supply of services even where the supplier has left the group by the time consideration for the supply is the subject of a VAT invoice and paid?

Facts

The Appellant, Prudential Assurance, was at the relevant time carrying on a with-profits life and insurance business. A company called Silverfleet Capital Limited (“Silverfleet”) provided Prudential with investment management services in relation to the with-profits fund known as “the Funds Fund”. Under an investment management agreement, the consideration which Silverfleet received for its services comprised (1) a management fee, and (2) performance fees, payable in the event that the performance of certain sub-funds exceeded a set benchmark rate of return. When Silverfleet was rendering its investment management services, Prudential was the representative member of a VAT group of which Silverfleet was also a member. However, on 8 November 2007, a management buy-out was effected as a result of which Silverfleet ceased to be a member of Prudential’s VAT group. It also ceased to provide management services to Prudential. During 2014 and 2015, the hurdle rate set under the 2002 investment management agreement was passed. Silverfleet accordingly invoiced Prudential at various dates between 16 January 2015 and 11 July 2016 for performance fees totalling £9,330,805.92 plus VAT at 20%. On 7 September 2017, in response to a non-statutory application from Prudential, the Respondent, HMRC, decided that Silverfleet was liable to account for and to pay VAT on the performance fees. This decision was upheld on a subsequent statutory review by HMRC. Prudential appealed HMRC’s decision to the First-tier Tribunal, which allowed the appeal. This was subsequently overturned by the Upper Tribunal on HMRC’s appeal, and the Court of Appeal upheld the Upper Tribunal’s decision. Prudential now appeals to the Supreme Court.