Another Brief concerning pension fund management costs and the recent changes to the UK rules has been published following the CJEU’s judgment in PPG Holdings (C-26/12).

This Brief follows on from HMRC’s initial Brief (06/14) which concerns the conditions that the employer must meet in order to be able to recover the VAT on pension fund management costs. The initial Brief advised that for VAT recovery the services must be supplied to the employer and that this requires the employer to commission and pay for the services.

In a subsequent Brief (43/14), HMRC reduced this requirement to the employer being a party to the contract. This opened the way for tripartite contracts between the fund manager, the employer and the fund.

The current Brief focuses on these tripartite agreements and seeks to address concerns which have been raised about such contracts. The Brief states HMRC accepts that such tripartite contracts can be used to demonstrate that the employer is the recipient of the supply and entitled to deduct the VAT.

It then sets out the conditions which must be evidenced within the contract. These can be found in the bullet points under the section headed “Tripartite contracts”. The transitional period until the end of December this year remains, but employers can rely on the new rules now, if they so wish.

More information is available in the Brief which is published here.