The Association of Pension Lawyers has urged HMRC to make amendments to the rules around recovering VAT on services to defined benefit pension schemes, allowing thousands more schemes to renegotiate their contracts with suppliers.

A solution to the ongoing problem has been put forward by the association, which would allow schemes to make a single amendment to their rules to meet HMRC’s requirements and still allow employers to recover VAT.

The suggestion comes as part of wider concerns from the APL about the lack of clarity on recovering VAT on services to pension schemes.

“This lack of clarity leaves sponsoring employers facing extra VAT costs due to the huge difficulty for the industry of meeting HMRC’s tripartite contract requirements by the current 31 December deadline,” APL said.

APL chair Anna Rogers said she hopes HMRC will “look favourably” on the proposal, which would clarify that services supplied in order to run the pension scheme are provided for the benefit of the sponsor.

“If the principle of future VAT recovery is acceptable to HMRC, which it seems to be, we’d like to find an easier way than for 6000 DB schemes to have to renegotiate all their contracts with suppliers. Scheme resources are finite and it would be good to put everybody’s time and money to better use,” Rogers added.

She added that at present, the suggested solution has gained “wide support” from pensions industry bodies.

APL further stressed there are still “big issues” for suppliers to resolve with the tripartite contract approach, including conflicts, professional rules and liability.

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