HMRC has issued Revenue and Customs Brief 22/14 to update its position following the CJEU’s decision in ATP PensionServices (C-464/12) and to extend the transitional period announced in Brief 06/14 which set out its position as a result of the decision of the CJEU in PPG Holdings BV (C-26/12).
In PPG, the CJEU had held that an employer was entitled to deduct the VAT it paid on services relating to both the administration of its employees’ pensions and the management of the assets of the pension fund – even though the pension fund was a legally and fiscally separate entity.
Before PPG, HMRC allowed employers to deduct VAT incurred in relation to the general management costs (the administration) of an occupational pension scheme, but not in relation to the investment management costs. In addition, where a single invoice was received covering both the administration of the pension scheme and the management of its investments, HMRC allowed the employer to treat 30% of the VAT as relating to the general management of the scheme; the remaining 70% being treated as relating to investment management. Brief 06/14 announced that, following PPG, some expenses previously treated as not deductible may now be deductible. The brief also outlined the process for submitting any claims and provided for a transitional period of six months during which, in specified circumstances, a 70/30 split could be still be applied.
In ATP, the CJEU held that some of the services supplied by ATP could qualify for exemption on the basis that the scheme was a ‘special investment fund’ and that the services fell within the definition of ‘management’ for the purposes of the VAT. The CJEU also found that certain services provided by ATP, which involved the movement of payments between parties, could qualify for the financial services exemption.
The brief confirms that HMRC is now reviewing the VAT treatment of pension scheme administration and fund management services to take account of both the PPG and ATP decisions and to consider whether to make any changes to the guidance outlined in Brief 06/14. It announces the publication of further guidance in the autumn and confirms that, until then, businesses may continue to use the transitional arrangements outlined in that brief.
HMRC has issued Revenue and Customs Brief 22/14 to update its position following the CJEU’s decision in ATP PensionServices (C-464/12) and to extend the transitional period announced in Brief 06/14 which set out its position as a result of the decision of the CJEU in PPG Holdings BV (C-26/12).
In PPG, the CJEU had held that an employer was entitled to deduct the VAT it paid on services relating to both the administration of its employees’ pensions and the management of the assets of the pension fund – even though the pension fund was a legally and fiscally separate entity.
Before PPG, HMRC allowed employers to deduct VAT incurred in relation to the general management costs (the administration) of an occupational pension scheme, but not in relation to the investment management costs. In addition, where a single invoice was received covering both the administration of the pension scheme and the management of its investments, HMRC allowed the employer to treat 30% of the VAT as relating to the general management of the scheme; the remaining 70% being treated as relating to investment management. Brief 06/14 announced that, following PPG, some expenses previously treated as not deductible may now be deductible. The brief also outlined the process for submitting any claims and provided for a transitional period of six months during which, in specified circumstances, a 70/30 split could be still be applied.
In ATP, the CJEU held that some of the services supplied by ATP could qualify for exemption on the basis that the scheme was a ‘special investment fund’ and that the services fell within the definition of ‘management’ for the purposes of the VAT. The CJEU also found that certain services provided by ATP, which involved the movement of payments between parties, could qualify for the financial services exemption.
The brief confirms that HMRC is now reviewing the VAT treatment of pension scheme administration and fund management services to take account of both the PPG and ATP decisions and to consider whether to make any changes to the guidance outlined in Brief 06/14. It announces the publication of further guidance in the autumn and confirms that, until then, businesses may continue to use the transitional arrangements outlined in that brief.
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