Commentary

V7.468A Charities—cost-sharing exemption

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.468A Charities—cost-sharing exemption

Part V7 Tax planning | Commentary

V7.468A Charities—cost-sharing exemption

The cost sharing exemption, introduced by FA 2012, should be of benefit to businesses and charities with exempt and/or non-business activities.

Organisations with exempt and/or non-business activities can form an independent group and, providing certain conditions are met, qualifying supplies of services from the group to its members benefit from the VAT cost-sharing exemption.

Qualifying supplies of services are services provided by the group to its members at cost (ie not at a discount) which are necessary to the exempt or non-business activities of the recipient members, and which do not result in a distortion of competition.

The five conditions relating to the cost-sharing exemption are:

  1.  

    (1)     There must be an independent group of persons ie a cost-sharing group supplying services to its members.

  2.  

    (2)     All members of the cost-sharing group must carry on an activity that is exempt

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