22. Funded pension schemes

When VAT is deductible on costs incurred in winding up a company’s occupational pension scheme.

When a company is being wound up, VAT is deductible on supplies under section 94 of the VAT Act 1994, if the company:

  • still exists as a legal entity
  • is still receiving supplies for which it is liable for VAT

This includes VAT on costs incurred in winding up the company’s occupational pension scheme.

The company can reclaim the balance of the VAT deductible on these supplies for the relevant period if this is more than the tax the company owes us for that period. Claims are made through its insolvency practitioner.

You can find more information in Funded pension schemes (Notice 700/17).