HMRC decision affects pension fund management services provided in respect of defined benefit pension schemes.
On 26 March 2015 HMRC published Revenue and Customs Brief 8 (2015) entitled Deduction of VAT on pension fund management costs.
This follows the decision of the Court of Justice of the European Union (CJEU) in C-26/12 Fiscale Eenheid PPG Holdings BV cs te Hoogezand (PPG).
The decision affects pension fund management services provided in respect of defined benefit pension schemes. For an employer to be able to deduct any VAT, it will be necessary for them to be issued with a valid invoice for the full cost of the supply and to pay the service provider directly for the full cost of the services. HMRC does not accept that an equivalent increase in contributions to the fund or any payment that is made by, or through, the fund constitutes payment by the employer.
Transitional period Businesses may continue to use the VAT treatment outlined in VAT Notice 700/17 until 31 December 2015. However, in order to do so, both employer and pension scheme trustees must agree the same treatment.
Further information about the PPG decision referred to above is also available. That brief outlines the VAT treatment that applied prior to the PPG decision, the way that VAT treatment has changed as a result of the decision and the transitional arrangements that are currently in place.