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70/30 split will continue to be available to taxpayers.
HMRC has confirmed it will keep the rules for input tax deduction – including the 30/70 split – on VAT recovery for defined benefit (DB) pension schemes.
As a result, recoverability of VAT will continue to depend on the nature of the service rather than who contracted for it and received it. The decision is in light of the CJEU ruling in Fiscale Eenheid PPG Holdings BV.
Ian Bell, head of pensions at RSM, said: ‘HMRC’s change in policy is welcome, but it is concerning that the updated guidance has been made available only a few weeks before the pre-defined transitional period was due to expire and, even then, only by means of HMRC’s internal manuals [VAT Input Tax Manual at para 44600]. We have yet to see anything published in any public forum.’
Trustees of pension schemes and employers have long awaited clarification from HMRC of its policy on VAT recovery for DB schemes.
