Pictured above: Lisa Topliss, Partner of VAT at PKF
The government's proposals on the introduction of a cost-sharing
exemption from VAT have finally been published in a consultation
document launched this week. EU law already allows 'non taxable'
organisations, such as charities and exempt businesses, to save VAT
by forming associations to share costs but the government has been
dragging its feet on implementing the exemption in the UK.
Lisa Topliss, Partner of VAT at PKF, said:
"The commencement of the cost-sharing consultation exercise is
long overdue - the exemption could give many charities a much
needed cash boost. At first glance, the proposals appear to be a
very positive step towards implementing the exemption in the
UK.
"Some other EU states that have put the exemption in place
already have done so in a half-hearted way - restricting its
benefits. So, it is particularly pleasing that the government seems
to be taking note of such issues and is proposing to apply the UK
exemption across all exempt and non-business sectors.
"The government also appears to be taking an inclusive and
pragmatic view of the type of support services that should qualify
for the exemption: hopefully this will make it easier for
organisations to realise the VAT savings that the EU rules are
intended to make available."
"We are pleased that the starting point of what appears to be a
very positive consultation is to include all VAT exempt sectors,
including finance and insurance. For exempt businesses that work
across many locations, it may be useful in reducing VAT costs that
often arise from the cross-border provision of such services, so I
am particularly interested in HMRC's indication that they have no
objection in principle to a multi-territory cost-sharing
group.
"UK organisations that may benefit from cost-sharing should now
start talking to other operators in their sector to see what scope
they have to share support services. Such arrangements will take
some time to set up, so start the process now to ensure your
organisation gets the VAT savings as soon as the exemption is
implemented."
For more information about PKF, please visit their website here:
www.pkf.co.uk