VAT Update

In the summer 2011 edition of charities, we reported on several VAT developments relevant to the charities sector.

This update included discussions on the proposals for VAT-exempt cost-sharing arrangements and new VAT recovery rules for independent academy schools.

HMRC has since published a consultation document on the implementation of the cost-sharing exemption in the UK, with a view to publishing draft legislation in 2012.

HMRC invites comments on a potential model allowing groups of eligible bodies (including charities, housing associations, universities and further education colleges) to share certain resources without generating irrecoverable VAT on the costs charged to group members. It also asks specific questions about the potential impact of implementation.