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07 Jul 2015

VAT on pension fund investment management costs


Potential VAT savings on pension fund investment management costs

Trustees and employers have long been hoping for clarification on whether they can reclaim the VAT paid on pension scheme investment management costs. HMRC has finally clarified the position.

Sponsors of DB pension schemes may reclaim VAT charged on pension fund management costs as their own input VAT where the services are provided to the sponsoring employer and the service provider, the employer and the scheme trustees enter into a tripartite contract.

What must the "tripartite contract" provide?

The "tripartite contract" must provide that:

  • the service provider makes its supplies to the employer;
  • the employer is obliged to pay the service provider directly;
  • both the employer and trustees are entitled to sue the provider for breach of contract;
  • fund performance reports will be provided to the employer by the service provider on request; and
  • the employer is entitled to terminate the contract.

Why is this important?

Many employers with DB schemes will want to ask the scheme trustees to enter into revised agreements with providers of pension fund management services to allow them to obtain the relevant input tax deduction. We assist employers and trustees to prepare and review agreements to reclaim VAT.



Philip Goodchild

Philip Goodchild

T:  +44 20 7809 2166 M:  +44 7825 384 004 Email Philip | Vcard Office:  London