VAT and pension schemes
HMRC has announced that the withdrawal of the "70/30" split on VAT charged by the managers of funded pension schemes has been postponed while consultations take place. Under the "70/30" split, 30% of the VAT on such services can be treated as the input tax of the company providing the pension. We expect that the consultation will be completed by 1 January 2006 and will be followed by an HMRC announcement.
Subsidies in France and Spain
The ECJ has ruled that the tax authorities in France and Spain were wrong in preventing businesses from recovering VAT on certain purchases where part or all of the cost of those purchases was met by a subsidy. Businesses with operations in France and Spain should now consider whether they have a claim for underclaimed input VAT in those countries.
