VAT relief on cost-sharing arrangements may be on the cards

UK charities suffer greater VAT costs than charities in many other European countries because of the UK’s failure to implement a key VAT relief available under European VAT legislation. This may now change following a Budget announcement.

Baker Tilly analysis

Many Member States have adopted a key VAT relief available under European VAT legislation that exempts cost-sharing arrangements between charities. The UK to date has not adopted this measure, leaving charities in this country at a distinct disadvantage, given that they are unable to recover most of the VAT that they are charged. This may be about to change.

In detail

March’s Budget documentation contained an announcement that 'the Government recognises the efficiencies that can be achieved by organisations such as charities sharing services and the potential VAT barrier that exists. The Government will work with charities and other affected sectors to consider options for implementing the EU cost-sharing exemption.'