Outsourced fund management: keep the evidence behind your VAT treatment

Start with the service, then the VAT decision

HM Revenue & Customs published GfC20 on 10 September 2026 for businesses providing or receiving fund-management services. ICAEW highlighted the guidance on 28 September. It addresses outsourced services and the question of whether an arrangement contains one supply or several.

For finance teams, this is a useful prompt to check the evidence behind a VAT code. TaxMirror’s suggested review below is a records exercise, not an exemption decision or an HMRC-prescribed checklist.

Build a file around one arrangement

Choose one supplier arrangement and collect the master agreement, service schedules, changes, invoices and relevant correspondence. Record who supplies what, who receives it and which funds the work concerns. Give each document a date and link it to the period being reviewed.

Add a short account of how the arrangement operates. Ask the colleague responsible for buying the services to check it, and flag any difference between the documents and delivery. Keep unresolved questions visible rather than filling gaps with assumptions.

HMRC says a single contract does not settle the single-or-multiple-supply question. The facts and economic reality matter; no one indicator decides the result. HMRC’s recommended approach is to consider four indicators: suppliers, the typical customer’s view, contract and economic reality, and legislative intention. Their relevance and importance depend on the facts.

Keep the exemption reasoning separate

HMRC says exemption requires a qualifying fund and services which, viewed broadly, form a distinct whole and are specific to, and essential for, its management. Merely physical or technical services do not qualify. A single supply must relate solely to qualifying funds to be exempt; its liability cannot be split between qualifying and non-qualifying funds or decided by the majority.

In your review file, separate the description of the supply from the evidence about the funds and the reason for the VAT treatment. Record the adviser’s conclusion, the documents relied on and any conditions or open questions. This makes it easier to see which decision needs reconsideration when an arrangement changes.

Join the decision to the bookkeeping

Trace the reviewed arrangement to an invoice and its ledger entry. Note the invoice reference, service period, VAT code and return period. If the invoice wording is too brief to explain the coding, link the supporting schedule and review note rather than silently changing the description.

As an illustrative control, imagine that an invoice says only administration fee while the supporting agreement has several service schedules. Put the schedules beside the invoice and ask whether the recorded reasoning covers the actual work. The label alone should not become the team’s substitute for that review.

Assign an owner to investigate any unexplained difference. Preserve the original entry and a record of the question so a later colleague can distinguish an unresolved issue from an authorised correction.

Handle a possible error deliberately

GfC20 directs businesses correcting a submitted VAT return to the existing VAT error-correction guidance and asks them to put GfC20 in the reason-for-error box when the correction follows these guidelines.

If your review raises a concern, assemble the affected entries and supporting documents for your VAT adviser. This article does not specify a correction route, amount or deadline for your case. Keep the assessment and any subsequent action together in the file.