Cost sharing exemption consultation launched

A consultation to examine how the European VAT cost sharing exemption might be used by UK businesses and organisations has been launched by HMRC.

The exemption allows businesses and organisations making VAT exempt and non business supplies to form groups to achieve cost savings and economies of scale.

Once formed the groups are relieved of a VAT charge on their supplies if all the conditions of the exemption are met.

The consultation will also explore a framework for possible implementation of the exemption. If implemented it could remove the VAT charge preventing institutions such as universities and charities from gaining efficiencies by sharing costs with each other.

Comments are invited and should be sent by email to HMRC by 30 September 2011.

This is positive news for charities and not-for-profit organisations according to Grant Thornton.

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