Employer pension schemes in line for VAT windfall

Employers operating pension schemes under auto enrolment could be able to reclaim VAT, if there is a direct link between employer costs and a business’ taxable activities, according to Baker Tilly.

If allowed, there could be a potential £1.9bn of VAT at stake.

In the case of Dutch industrial group PPG Holdings BV, the Court of Justice of the European Union (CJEU) ruled that subject to certain conditions, an employer should be able to reclaim VAT on both the day-to-day management of a pension scheme and management of investments.   

It ruled that pension fund management and operation costs are...

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