Revenue & Customs will be liable to make repayments of millions of pounds following its acceptance that fund management of venture capital trusts should have been exempt from VAT since January 1990. That is the verdict of VAT experts at mid-tier firm PKF. Historically, the Revenue maintained that fund management of closed ended investment vehicles, such as investment trust companies and VCTs, should be subject to VAT. Last year the European Court of Justice ruled that fund management should be exempt, which suggested that other collective investment schemes should also benefit. The Revenue announced in the 2007 Budget that it would exempt fund management for trusts with effect from 1 October this year. It has now announced that it accepts the exemptions should have been from 1 January 1990. PKF VAT director Debbie Jennings said: 'This is a great result for VCTs and shows that the Revenue is applying VAT exemptions too narrowly in certain areas.' She added: 'The capitulation may also indicate that ultimately the Revenue might give in over the fund management of pension funds, and the sums of money involved there are even greater.'