October 24, 2021

Volume XI, Number 297

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October 22, 2021

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UK Pensions VAT – Yet Another Update

Keen readers will recall the long-running saga of the correct treatment of VAT incurred by employers on pension fund costs. Following rulings by the ECJ, HMRC had determined that it needed to change existing UK practice. In particular, this affected defined benefit schemes where HMRC had allowed employers to recover some, but not all, of the VAT paid on investment managers’ fees. This ran counter to the ECJ’s decision in the PPG case.

In October 2015 we posted that the HMRC had issued an update on progress (or lack of it) in finding a workable solution that would allow employers to continue to recover VAT as input tax. A number of potential problems had been identified with the ideas that were circulating, including the use of tripartite contracts or adding pension fund trustees to the employer’s VAT group. To give everyone more thinking time, HMRC extended the transitional period during which the old practice could be used until December 2016.

Sadly, nearly a year on, it appears that the problems have not been solved. HMRC have today issued a short (brief?) Brief buying themselves, and employers and scheme trustees, more time. The transitional period has been extended to 31 December 2017, with the possibility of a further extension “if necessary” beyond that date. Welcome news, perhaps, but after so much time has been spent trying to find a solution, it does make you wonder whether the only way out of this conundrum would be to ignore the ECJ’s rulings. Brexit anyone?

 

© Copyright 2021 Squire Patton Boggs (US) LLPNational Law Review, Volume VI, Number 249
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About this Author

Catherine McKenna Pensions Attorney Squire Patton Boggs Leeds, UK
Partner

 

Catherine McKenna is a partner in our Pensions practice group. Her particular expertise is in providing advice to companies and trustees on all aspects of pensions law, including advice on managing pension risk and developing creative solutions to assist with funding shortfalls. She deals with pension plan restructuring, governance, and the pensions issues arising on corporate activity. Catherine also specialises in Pension Regulator applications and intervention, pension disputes and negotiating all types of pension fund investment management, custody and other...

44 113-284-7045
Caroline Noblet Labor & Employment Attorney Squire Patton Boggs London, UK
Partner

Caroline Noblet co-chairs our Labor & Employment Practice Group and is based in our London office. Caroline has more than 25 years of experience as an employment lawyer, advising companies in the FTSE 350 and those on the international stage. She leads a team of more than 155 employment and immigration lawyers based in our offices across the world. She is passionate about the benefits of a “one-stop shop” proposition, as the team works with global clients on a local and multi-jurisdictional basis, bringing the best in class service in a time and cost efficient way. With a constant...

44 20-7655-1473
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