HM Revenue & Customs has published final guidance on how charities can use an exemption that allows them to share services without incurring VAT costs.T
The exemption, which allows charities to set up a "cost-sharing group", gained royal assent in the Finance Act in July. HMRC published final guidance on the measure last week.
It allows charities to set up a separate company, jointly owned by all members, to deliver services to those members. It is intended to make it easier for charities to share services such as IT, payroll and HR without incurring extra VAT costs.
The exemption has been criticised by umbrella bodies for being complex and difficult to use. Graham Elliott, a partner at the tax advisers Haysmacintyre, said it could be some time before any organisations are created to take advantage of the exemption.
"We’ve not yet seen the creation of any cost-sharing groups," he said. "Given the complexity of setting them up, however, it might be a while before one appears."