HMRC confirms VAT payable on pensions consultancy charges

HM Revenue and Customs (HMRC) confirmed in April that consultants that advise and help employers to set up and administer contract-based defined contribution (DC) pension schemes, including group personal pension (GPP) plans, stakeholder schemes and group self-invested personal pensions, must charge standard-rate value-added tax (VAT) to employers on services provided to them in return for consultancy charges, where these have been used prior to last month’s ban on consultancy charging for auto-enrolment schemes, or other fees.

HMRC also said organisations that supply advice and assistance to employers around the implementation and ongoing administration of contract-based DC schemes must establish two matters to determine the VAT treatment: what is the nature of the service supplied and who is the recipient of that service?

Employers will normally be able to recover the VAT charged on these services as input tax.