Independent pension trustees will be able to claim back VAT on the fees charged by professional advisers following a landmark tribunal decision.
Capital Cranfield Trustees Limited won its VAT Tribunal against HM Revenue and Customs as the tribunal decided that a professional independent trustee, with statutory powers that is registered for VAT, can claim a refund on the fees charged by professional advisers in the course of winding-up.
The decision is likely to have major implications for pension schemes who are in winding-up with an insolvent employer.
Previously only ongoing schemes have been able to reclaim VAT on professional fees incurred by trustees. This decision provides an opportunity for trustees to recover previously charged VAT and reduce the cost of administering a fund in the future.
Ian Hyde, tax partner at law firm Pinsent Masons, said: 'This case has wide implications for independent trustees and how funds are administered. As VAT reclaims can essentially only be made for the last three years, independent trustees should be acting as soon as possible.'
There is still uncertainty, however, about which schemes can benefit. If there are other trustees involved or if a trustee does not have statutory powers it is unclear how the decision will apply.
This could allow the taxman to argue that the decision only applies in limited circumstances.
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