Cost-Sharing VAT Exemption Consultation Is Published

As promised in the 2010 and 2011 Budgets, HMRC have launched a public consultation on the VAT cost-sharing exemption ('the exemption'). The general aim of the exemption is to reduce VAT exposure where organisations and businesses carrying out exempt and/or non-business activities share costs. This will be achieved through the creation of a cost sharing group ('CSG') which makes VAT-exempt onward supplies of jointly funded services to its members. The exemption will apply to any VAT-exempt and/or non-business activities and therefore its use is not limited to charities. However, the exemption will only be available where all the conditions are met.

The exemption is a creation of EU law and is to be implemented by each EU nation. However, there is no common framework for implementation and there are currently infraction proceedings pending against some other EU countries for alleged mis-implementation. The purpose of the consultation is 'to invite comments on a