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Universities win VAT exemption for shared services

The government has agreed to allow universities a VAT exemption when they share services, the chancellor’s autumn statement reveals.

The measure is intended to open the way for increased cooperation between institutions in areas such as procurement and administration. It would mean that, from February, charitable bodies—including universities—would not incur extra VAT costs by working together. This could happen if such bodies had set up a private company to run a shared payroll service, for example.

The exemption was recommended in a review conducted by Bill Wakeham, the former University of Southampton vice-chancellor, in June 2010 as a way for universities to make efficiency savings. The Treasury is thought to have resisted the idea until now.