On 1 November 2017, HMRC revised its guidance on input tax deduction for funded occupational pension schemes, which is found in the VAT Input Tax Manual (VITM).
The guidance confirms that the so-called 70/30 split concession will not be withdrawn and will be available to employers indefinitely. Under this concession, employers may treat 30% of the VAT element of a third party invoice for the provision of administration and investment services provided in connection with a defined benefit pension scheme as attributable to the administration element and as its input tax.
The VITM also provides guidance on alternative arrangements that may be adopted by employers and scheme trustees, including tripartite contracts between the third party service provider, employer and scheme trustees and the inclusion of the corporate scheme trustee in the employer’s VAT group.
The indefinite retention of the 70/30 split concession, will be welcomed by many employers and scheme trustees.
The VITM and the update published on 1 November 2017, is available to view here.