HMRC buys more time on EU VAT issue

27th September 2016

HM Revenue & Customs has delayed its guidance on alternative solutions for employers seeking to recover value added tax on defined benefit pension administration costs, prompting speculation that a decision will not be made until Brexit negotiations advance further.

A 2013 ruling by the Court of Justice of the European Union had established that employers would be unable to claim VAT relief on services provided to another organisation, putting the UK’s long-standing ‘70/30’ system in breach of EU law.

HMRC has since been trying to find solutions that allow employers to recover some VAT while obeying the new case law, but this week announced that difficulties reconciling the two objectives mean no decision will be reached until the end of 2017.

The brief also extended the transitional period, during which employers and schemes can operate either the traditional system or a new arrangement, to the same date.

HMRC also hinted at a further delay, announcing: “Towards the end of this period we’ll review this position and consider the need for a further extension if necessary.”

This article first appeared on Pensions Expert, by Angus Peters. Click here to read the full article.

©Financial Times 2016

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