- Major Policy Change: As of June 18, 2025, HM Revenue & Customs (HMRC) announced that employers can now recover 100% of VAT incurred on investment management services for Defined Benefit (DB) pension schemes, significantly simplifying the previous complex and inconsistent VAT recovery process.
- Elimination of Administrative Burdens: The new policy removes the need for tripartite agreements and dual-use apportionment calculations, which had previously complicated compliance for employers. This change allows for straightforward VAT recovery, improving cash flow and enabling retrospective claims for eligible costs incurred over the past four years.
- Strategic Opportunities for Employers: The policy offers employers and trustees a chance to optimize their VAT recovery processes, enhance compliance, and improve audit readiness. Businesses are encouraged to review their contracts, update invoicing protocols, and engage VAT specialists to fully leverage the benefits of the updated regulations and ensure compliance.
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