New HMRC policies on VAT and pension schemes – could you benefit?

November 26, 2014

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Following two recent CJEU judgments concerning pension fund management, HMRC has accepted that sponsoring employers will be able to recover VAT on fund management costs if they satisfy certain criteria.

Sponsoring employers of defined benefit schemes:

Following HMRC's new Revenue and Customs Brief on VAT recovery on pension fund management costs, it may now be possible to secure 100% VAT recovery for the sponsoring employer.

By considering contracts, the pensions regulatory position and by working with investment managers and trustees, employers could significantly improve their VAT recovery position.

We’ve developed contracts consistent with the new policy and are now working with businesses to very quickly obtain the benefit of this new policy.

VAT exemption for management of defined contribution schemes - claims for VAT refunds invited:

HMRC has also accepted that management of defined contribution (DC) schemes can be exempt from VAT and invites retrospective claims for overcharged VAT. Many DC schemes may now be entitled to refunds.

HMRC accepts that fund management should always have been exempt provided that the costs are solely funded by the pensioner whose investments are pooled and spread over a range of securities, with the pensioners bearing the investment risk. Funds that pool the assets of a number of personal pension schemes and share these criteria will also qualify.

We’ve assisted many businesses in submitting claims for overpaid VAT and, in some cases it may be possible to extend those claims beyond the usual four year capping period.

If either of these changes might affect your business and you’d like to find out more, please contact me at the details below or speak to your usual PwC advisor

[email protected]
0207 804 3254