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VAT treatment of pension fund management services

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From 1 January 2018, HMRC will no longer allow insurers to treat their supplies of non-special investment fund (non-SIF) pension fund management services as exempt from VAT. To date, HMRC policy has been to treat all pension fund management services provided by regulated insurance companies as exempt from UK VAT, irrespective of whether the fund belongs to a defined benefit, defined contribution or hybrid scheme. This has created a discrepancy between the VAT treatment of pension fund management by insurers and non-insurers.

The change, announced in Revenue and Customs Brief 3 (2017) (see follows the conclusion of relevant litigation in the CJEU and the government’s recognition that there will be no further review of EU rules in this area before the UK exits the EU. From January 2018, insurers will only be able to exempt their pension fund management if they meet the conditions set out in the CJEU decision in ATP Pension Services [2014] STC 2145. HMRC says it expects most pension fund management services provided by insurers will now relate to defined contribution pension funds, which qualify for the exemption.

Issue: 1372
Categories: News , Indirect taxes , VAT