Reclaiming VAT on SIPP provider fees

Lel70

Can anyone tell me if I can reclaim the VAT on my SIPP provider's annual renewal fee. My SIPP is VAT registered and I have been charged the VAT but my provider says I can't reclaim it from HMRC. Can anyone advise or tell me why that is the case, please. Thanks Lel70

SippTechie

I've made a few enquiries with HMRC's VAT people about the circumstances when VAT can and can't be recovered in SIPPs over the years.

If you are talking about your SIPP being VAT registered I'm assuming that your SIPP owns a property? If your SIPP does not own a property then your individual SIPP will not be VAT registered. Individual SIPPs can only register for VAT if they are making Vatable supplies and the only Vatable supply a SIPP can make is renting out a commercial property where the rent is subject to VAT.

Assuming your individual SIPP is registered for VAT because it owns commercial property then your SIPP should be able to recover the VAT on the property-related admin fees which are charged to it, but not the other fees.

The reason your SIPP can only recover the VAT on the property-related admin fees is because these are the only "purchases" which are being made in relation to the Vatable activity of renting out the property. The non-property related admin fees would be charged if your SIPP did not own the property and so are not recoverable by your SIPP.

If all of the above is irrelevant because your SIPP doesn't own a commercial property and you are asking purely about your ability to recover the VAT on the SIPP fees then the key point is that the fees are not being charged to you personally, they are being charged to your SIPP. You can't personally recover the VAT on fees which are not being charged to you personally.

Lel70

Thank you SippTechie. To clarify - my SIPP does own a commercial property which is why it is registered for VAT. My SIPP provider has charged VAT on a) their SIPP annual renewal fee and b) the SIPP property admin fee. My query was whether I could reclaim the VAT on both of these charges. From what you say, it sounds like I can only reclaim the VAT on b)? Is that right? Information is practically impossible to find on this matter and even my SIPP provider contradicts themselves on this point each year!

System

Not a well known SIPP specialist provider based in East Anglia by any chance?

Recent experience suggests they are not very knowledgeable about VAT and property SIPPs.

SippTechie

Lel70 wrote: »

Thank you SippTechie. To clarify - my SIPP does own a commercial property which is why it is registered for VAT. My SIPP provider has charged VAT on a) their SIPP annual renewal fee and b) the SIPP property admin fee. My query was whether I could reclaim the VAT on both of these charges. From what you say, it sounds like I can only reclaim the VAT on b)? Is that right? Information is practically impossible to find on this matter and even my SIPP provider contradicts themselves on this point each year!

That is certainly my understanding of the position based on several conversations with HMRC.

It can be very difficult to get an answer from HMRC on VAT issues, much harder than dealing with their pension or ISA people - the latter being far and away the most helpful. Their VAT Helpdesk typically refuses to answer questions unless queries are linked to a specific VAT registered case and once you've given them the VAT number they will only answer the query after that VAT registered entity has taken the specific action about which you want to ask. They won't answer before the action has been taken. Not very helpful when you want to check an action will be okay before going to the trouble of even VAT registering let alone taking the relevant action.

I would not be surprised if other SIPP providers have received different answers from HMRC, or struggled to get a definitive answer at all.

SippTechie

Sorry, just to reiterate a point made in the initial response.

The information I've received is that your SIPP can recover the VAT on the property-related fees (I'm assuming the VAT return is completed by the administrator). You cannot recover the VAT personally or through a business you run which is separate to the SIPP.

JasonLVC

SippTechie wrote: »

Sorry, just to reiterate a point made in the initial response.

The information I've received is that your SIPP can recover the VAT on the property-related fees (I'm assuming the VAT return is completed by the administrator). You cannot recover the VAT personally or through a business you run which is separate to the SIPP.

I've had a number of SIPP providers as clients and also advised many of them in the past, they are usually okay on most VAT matter but I do agree that HMRC's helpline function is best avoided.

To reiterate the answers already given, the SIPP admin fee is from the SIPP to the individual person. That fee is subject to VAT and the individual cannot reclaim that VAT, even if they were VAT registered.

The right to reclaim input tax is on the basis you have made a taxable business supply. Whilst the property rental held within the SIPP is making a taxable business supply, the individual behind the SIPP is not in business personally (and even if they were the VAT on the SIPP admin would not be seen as an input into a taxable business, it'd be seen as a personal expense).

Lel70

Thank you again SippTechie and to you JasonLVC. To answer your query SippTechie - I do the VAT return (not the administrator/Sipp provider). I have two different answers from 2 different staff at the Sipp provider. One says the SIPP can reclaim the VAT on the annual renewal fee and one says it can't! How confusing and annoying, considering their fees are substantial (imho)!

JasonLVC

Lel70 wrote: »

I have two different answers from 2 different staff at the Sipp provider. One says the SIPP can reclaim the VAT on the annual renewal fee and one says it can't! How confusing and annoying, considering their fees are substantial (imho)!

Its very simple and not confusing so the SIPPS are being a bit unhelpful it seems....who is the invoice addressed to?

The only person who can reclaim VAT is the VAT registered person (the SIPP). If the invoices are addressed to "The SIPP" then recovery is possible (but highly unlikely the SIPP will be billing itself!). If they are addressed to Mr Lel70 then none of the VAT is recoverable as the expense does not relate to the SIPP but to you personally.

SippTechie

On the subject of who is billing who I can only speak with absolute confidence about the company I work for but suspect many trust-based SIPP providers will operate in the same way.

We have separate firms performing the roles of SIPP operator (the FSA registered bit of the firm which administers the SIPP) and SIPP trustee (the legal owner of the SIPP assets). There are various reasons why SIPP companies do this, one of which is to ensure that SIPP assets are ring-fenced in the non-trading trustee company so that if anything goes wrong with the trading SIPP operator the assets are protected in the non-trading company.

One of the results of this structure is that the invoicing for the SIPP fees is from the SIPP operator (the firm providing the administration service which is being charged for) to the SIPP trustee (the firm which legally owns the assets, property in this case). This means that the VAT invoice is addressed to the SIPP (trustee) and means that the SIPP can recover the VAT on the property-related fees.

I'd be surprised if many SIPP firms address their invoices to the individual SIPP client as the individual SIPP client doesn't typically pay the fee, it is deducted from the SIPP.

If you are completing a VAT return on behalf of the SIPP then I suspect you can recover the property-related VAT fees. If you are completing a VAT return on behalf of yourself, your business, or a joint venture (it is becoming more common for SIPPs to jointly own properties with non-SIPP entities) then I don't believe you can recover the VAT as the fee is unlikely to be getting charged to any of those entities.

Lel70

The invoice is made out to me as the SIPP trustee. I do understand the logic of what you are both saying but what I understood was that it is the whole SIPP that is VAT registered (it only has one concern: the commercial property) and so it's annoying that the VAT element of the Provider's annual fee can't be reclaimed.