As you may have seen in the press, HMRC have recently issued two briefing notes setting out a change of policy in connection with pension funds.
Exemption for Defined Contribution Schemes
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.
Indeed, HMRC now accept that exemption should always have applied to these services.
VAT recovery on pension fund management costs
As you will know, in relation to defined benefit schemes, employers have historically only been allowed to reclaim VAT on administration of the fund (as opposed to the management of its assets).
Where a single invoice was raised to cover both services, VAT recovery was determined by means of a 30/70 split.
This arbitrary distinction has now been withdrawn and, provided the employer has a VAT invoice, and can show that it received and paid for the services, it will be entitled to reclaim all of the VAT (subject to the normal rules).
If you are affected by either of these issues and need to know more, please drop me a line on email@example.com or give me a call on 01484 538351