Spotlight On VAT

Share the costs – but avoid the VAT?

Many charities and not-for-profit organisations are attempting to reduce establishment costs by setting up arrangements with other charities to share management costs such as finance, HR and estate management.

Unfortunately, the provision of administration services between members of the cost-sharing association might give rise to significant VAT costs under UK VAT law as HMRC has not adopted a VAT exemption available under EU VAT law.

Last summer, HMRC announced it would carry out a consultation with a view to implementing the cost-sharing VAT exemption already in place under EU law. In this year's Budget, it was announced only that the consultation was ongoing.