Autumn Forecast measures on shared services VAT are a welcome boost for the voluntary sector

We have today welcomed the measures set out in George Osborne’s Autumn Forecast statement relating to shared services VAT.  Under the proposals, a VAT cost sharing exemption will be introduced from February 2012.  The exemption removes an additional VAT charge which can arise when organisations such as charities collaborate.

Sir Stuart Etherington, our Chief Executive, said:

‘NCVO and others have long been pushing for Government to address the issue of charities not being able to recover VAT on shared services, as it presents a sizeable stumbling block to effective collaborative working.  We know from our members that there is appetite within the sector to work together more effectively and efficiently, especially in these tough times, but the additional VAT charge acted as a major disincentive, at odds with the government’s drive to encourage more collaboration.

‘We are delighted that the government is now taking action on what has been a longstanding issue.  By removing this barrier, more charities will be able to access efficiency savings and provide better services with their beneficiaries’ needs in mind.’

In September we submitted a joint response to the cost sharing exemption jointly with the Charity Finance Directors' Group (CDFG), warning that shared services VAT costs are a major obstable to effective collaboration.