On 5 October 2017, HMRC announced11 the withdrawal of its policy treating supplies of pension fund management services by regulated insurers as VAT-exempt.

HMRC policy had been to allow all pension fund management services provided by regulated insurance companies to be exempt from VAT. This was despite the fact that, since the ECJ decision in Card Protection Plan, it has been clear that the insurance exemption should properly apply only to the underwriting of risk and not to other supplies made by insurers.

The Brief states that HMRC is updating its policy to reflect the settled case law. The policy of allowing insurers to treat their supplies of pension fund management services as VAT exempt in all cases is being discontinued, from 1 April 2019. Going forward, the VAT treatment will depend on whether the pension scheme is a special investment fund (SIF) for VAT purposes (in which case, the supply of management services will be exempt). Defined contribution pension funds should qualify as SIFs, attracting VAT exemption.

The HMRC Brief can be viewed here.