VAT On Pension Scheme Management Services: What Has Changed?

A number of recent cases have changed the treatment of VAT on pension scheme third-party management services. This alerter sets out the current position and explains how schemes and employers can benefit from the 'special investment fund' exemption and the 'direct and immediate link' test. It also explains HMRC's current policy on reclaiming VAT on pension scheme management services.

Background

The treatment of VAT on pension scheme management services is complex. The two key questions to consider are below:

• Is the scheme a 'Special Investment Fund' and therefore are third-party management services exempt from VAT?
• If the scheme is not a 'Special Investment Fund', to what extent can the employer recover VAT on third party management services?