The UK pensions industry is set to launch a legal challenge as it aims to win back around £300 million in overpaid taxes, it has been revealed.

Just last year European courts ruled that investment trusts should be paid backdated overpayments as a result of the recent changes to value added tax rules.

Now pension funds are looking to benefit from the same treatment, with the £8 billion Wheels Common Investment Fund, which currently looks after the pensions schemes of Ford and Jaguar Cars, and the National Association of Pensions Funds (NAPF), leading the legal challenge.

Joanne Segars, NAPF chief executive, said: “After last year’s European Court of Justice judgment there is a strong case that defined benefit occupational pension funds should be exempt from paying VAT on investment management services.”

As well as calling for a rebate of around £300 million, the industry is also looking for VAT exemption in the future, which would save around £100 million a year.

For now the case is set to be presented to the UK VAT & Duties Tribunal, though it may be referred on to the European Court of Justice.