Customs and Revenue Brief 8 (2015) is HMRC’s most recent response to the ECJ decision in PPG Holdings BV (C-26/12) on the ability of an employer to recover VAT incurred on the cost of administrative and fund management services provided to defined benefit pension schemes. This Brief is an update to Customs and Revenue Brief 43 (2014): VAT on pension fund management costs, and focuses on the use of tripartite agreements for fund management services between the employer, the pension scheme trustees and the third party service provider. The Brief provides that a tripartite contract can be used by an employer in order to deduct VAT incurred on these services, provided that the contract contains certain minimum requirements (as set out in the Brief).
HMRC’s latest Brief is a welcome development from an employer’s perspective, as it addresses some of the difficulties faced by employers in trying to satisfy the requirements set out in Brief 43 (whereby the employer must show that it is the recipient of the supply, and has paid for and is a party to the contract for the services provided). Employers should be looking to take specialist tax and pensions law advice now in order to optimise their VAT recovery on administrative and fund management services through the use of tripartite agreements.