Home > IFA Industry > Tax Planning
HMRC tackles VAT cost-sharing exemption
The Chartered Institute of Taxation has welcomed legislation by HM Revenue & Customs to bring the European Union’s VAT cost-sharing exemption into UK law.
Services offered through cost-sharing have been subject to VAT unless they are carried out in-house.
Stephen Coleclough, vice-president of CIOT and president of the Confederation Fiscale Europeenne, said: “The implementation of this exemption is long overdue. We are pleased to see that the draft primary legislation is largely limited to reproducing the wording of the exemption in the principal VAT directive.”
He added that much of the detail would be laid out in secondary legislation yet to be published that will need careful scrutiny.
CIOT had urged HMRC to implement the exemption in accordance with the scope of the European Union directive.
It further stated HMRC should not seek to impose more restrictive conditions, for example by excluding back-office services form its scope.
Mr Coleclough said: “We welcome the invitation to be involved in the next crucial stage of developing the guidance on how the exemption will be implemented. That should include HMRC’s definition of certain terms, such as a ‘group of persons’, but the guidance should be just that.”
Cost-sharing will take place when a group of individuals, companies, charities or other bodies form a separate body to hire staff and acquire resources to provide member services. The buying-in of such services under current law is liable to VAT.
