CSE1020 | Introduction: What is the legal basis for the exemption?

Up to 31 December 2020, this exemption implemented in UK law the exemption in Article 132(1)(f) of Directive 2006/112.

The UK legislation for this exemption is Group 16 of Schedule 9 to the VAT Act 1994 as amended by Schedule 8, paragraph 95(4) of the Taxation (Cross-border) Trade Act 2018.

Group 16 - supplies of services by groups involving cost sharing

Item

1. The supply of services by an independent group of persons where each of the following conditions is satisfied:

1. each of those persons is a person who is carrying on an activity (‘the relevant activity’) which is exempt from VAT or is not carried out in the course or furtherance of a business.

2. the supply of services is made for the purpose of rendering the members of the group the services directly necessary for the exercise of the relevant activity,

3. the group merely claims from its members exact reimbursement of their share of the joint expenses, and

4. the exemption of the supply is not likely to cause distortion of competition.