HMRC have recently issued two briefing notes setting out a change of policy in connection with pension funds:
• HMRC now accept that DC occupational pension schemes qualify as Special Investment Funds for VAT purposes.
This means that fees charged for the management and administration of these funds qualifies for VAT exemption (and should always have done).
• For defined benefit schemes, the distinction between administration of a fund and management of its assets has been withdrawn.
Historically, employers have only been allowed to reclaim VAT on administration as opposed to the management of its assets.
This distinction has now been withdrawn and there is now the potential to reclaim all of the VAT.
There may be scope for significant refunds in relation to these changes, please contact Lesley Sutton on 01484 538351 for more details.