VAT and pensions - Are you on the road to a VAT-efficient destination?
07 November 2016
For most people reading this article, considering our personal pension position is something which is complex and can be very stressful. Knowing how much to put away, how to invest the amounts, whether we will have sufficient amounts to provide for us after retirement and trying to make sure we are keeping up-to-date with the latest changes to income tax relief on pensions savings can feel like a full time job.
Similarly, over the past few years, trying to keep up with pensions and VAT changes has felt like a never-ending task. As soon as the task of understanding the options and considering your business' position has been completed, VAT managers have found the rules have reset and the transitional date moved back again. Many are now asking whether the rules will ever really change, and whether potential VAT savings are really worth the effort.
After the two Revenue and Customs briefs released in September 2016, VAT managers find themselves at a crossroads: should they continue with VAT and pensions changes, pause or abandon the journey altogether? The right course of action will depend upon the circumstances of the business - what amount of saving is available, what the downside risk is, what work has been undertaken (and what costs incurred) to date, and what further effort is required to reach an outcome.
In terms of what those arrangements will look like, HMRC hasn't provided a single clear map as to how to achieve VAT savings, and HMRC may never provide a single map. There are a number of different paths available, only some of which may be suitable for each business. A number of businesses are pressing on and not withstanding the delay in the transitional period (presently scheduled to end on 31 December 2017); HMRC has indicated that businesses can implement VAT-efficient arrangements now. The VAT-efficient destination is still attainable, but businesses have been provided with some additional time to consider how to get there.
If you would like to discuss your options in more detail, please contact Dan Evans.
Telephone: 0207 212 3249