HM Revenue and Customs ("HMRC") has revised its policy on the recovery of VAT on pensions investment management costs following a decision in the Court of Justice of the European Union concerning a Dutch employer and its pension plan. This is an important development and will have a direct impact on both employers and trustees in the treatment of expenses in occupational defined benefit pension plans.
From 3 August 2014, HMRC will be taking a harder line on the direct link between input tax and output tax. This is likely to lead to lower VAT recovery overall. Time is short and we would urge employers to seek expert advice on their position and to involve trustees in discussions at an early stage.