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Legislation is to be introduced in Finance Bill 2012 to implement article 132(1)(f) of the Principal VAT Directive (the cost-sharing exemption) into UK law.
The move, which follows consultation over the summer, will allow VAT-exempt bodies to share back-office services without the need to charge VAT. Draft legislation will be published on 6 December.
Ben Flockton, director in PricewaterhouseCoopers's financial services practice, said the measure would be ‘good news for the education, charity and financial services sectors, as it will allow organisations to share costs without incurring irrecoverable VAT.
‘It is a welcome and unexpected boost for financial services businesses, as it was by no means clear the Treasury would extend this measure to include this sector.’
Download the autumn statement's tables of tax and tax credit rates and thresholds for 2012/13
