The Chancellor announced yesterday in his Autumn Statement that, following consultation over the summer, legislation will be introduced in the next Finance Bill to implement a cost sharing exemption for services shared between VAT exempt bodies.
The introduction of the exemption will benefit, amongst others, charities, housing associations, universities and higher education institutions who will be able to work together to share services without charging VAT on the services which are supplied. HMRC have indicated that if a cost sharing group already exists and it meets all of the conditions necessary for the exemption to apply, and it has consistently met those conditions prior to the implementation date of the legislation, then following implementation of the legislation a claim may be made to reclaim any VAT which was overpaid during the previous 4 years.
The draft legislation and the responses to the consultation on the implementation of the exemption will be published on 6 December. HMRC has stated that it will publish extensive guidance notes on the exemption in advance of the implementation of the legislation. We will issue a further e-update giving more information on the exemption once the draft legislation has been published.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
