VAT: Cost Sharing Exemption
After many years HMRC is now very close to introducing into UK VAT legislation an exemption for recharges between certain organisations whose activities are regarded as being non VATable. The main sectors likely to benefit from the introduction of this exemption are charity, education, social housing, finance and insurance.
Without such an exemption where organisations as described above work together or share resource, this often leads to an inadvertent (and expensive) 20% VAT charge payable on the recharge between the organisations, which in the main cannot be reclaimed by the paying organisation and therefore representing an actual cost. This is seen by many as being a financial barrier towards extending collaborative working in non VATable sectors.
Draft (but very brief) primary legislation has been published by HMRC and is expected to be included in the Finance Bill 2012 which is listed for publication by HM Treasury on 29 March. Prior to this date we are also expecting HMRC to publish (draft) secondary legislation and also further guidance on how they consider the new VAT exemption should be applied, and it is hoped that the exemption will finally be in place in June/July this year once the Finance Bill 2012 receives Royal Assent.
The introduction of this exemption should be very well received by affected sectors and is a positive step towards reducing the VAT burden incurred by those sectors where organisations look to pool resource and work collaboratively. For further guidance on how this might affect your organisation please do not hesitate to contact Mark Hetherington by telephone: 0191 243 6073 or email:markhetherington@unw.co.uk or Ian Coulthard by telephone 0191 243 6017 or email:iancoulthard@unw.co.uk)
In addition, as part of our series of regular presentations to the Charity and Not-for-Profit Sector we are hosting a seminar on 29 March 2012 (the day of publication of the Finance Bill 2012) to discuss the opportunities that the exemption offers. If you would like to attend, contact Ro Duns by telephone on 0191 243 6014 or email roduns@unw.co.uk
Other 2012 news
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UNW Apprentices going for accountancy gold at WorldSkills UK finals
Four talented accountancy students from UNW will represent the North East in the WorldSkills UK Accounting Technician national final
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UNW ensures Reece Group’s deal runs smoothly
Business advisers and accountants, UNW, has played a central role in Newcastle-based Reece Group taking control of pothole repair specialist Velocity.
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Annual Fraud Indicator for charities released
National Fraud Authority releases the results of their annual survey into the extent of fraud affecting charities in the UK.
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Budget Summary 2012
A summary of the key point from Chancellor George Osborne’s Budget of 21 March 2012 is available for you to download.
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Intrastat Declaration to change
HMRC announce changes to the Intrastat Declaration reporting requirements
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Profits down, costs up in NASDAL stats for 2020/11
Alan Suggett, member of NASDAL Technical Committee, was present at the BDA Conference in London when the annual benchmarking statistics were issued.
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New single tax definition of a charity
A new single definition of a “charity” for the purposes of all UK charity tax reliefs and exemptions will come into force from 1 April 2012.
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Seed Enterprise Investment Scheme
Subject to consultation SEIS will be introduced from 6 April 2012. It will allow investors to receive up-front income tax relief and the possibility of tax-free capital gains on their investment, as well as a CGT exemption on certain reinvested gains
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Thinking about buying or selling a dental practice
Alan Suggett is speaking at a seminar in Leeds covering the critical areas to be considered when either buying or selling a dental practice.
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Trio of key appointments shows faith in future at UNW
Leading independent firm of chartered accountants, UNW, has made a significant investment in its future with three strategic appointments.
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Dissolution (striking off) of companies
With effect from 1 March 2012, new legislation enacting Extra-statutory Concession C16 will impose a limit of £25k on distributions that can be treated as capital payments.
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HMRC plans further “tax cheats” campaigns
New campaigns will be launched by HMRC later this year aimed at missing tax returns; home improvement trades, including plumbers and electricians; and direct selling (including E-marketplaces).
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VAT: Cost Sharing Exemption
Further developments from HMRC eagerly awaited by charitable and other non VATable sectors.
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ITR deadline extended to 2 February 2012
HMRC have announced a temporary extension of deadline to 2 February 2012 because of strike by Public and Commercial Services Union.
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Fending off the taxman
Charles Linaker discusses the current position on tax investigations.
