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Applies to ‘directly necessary’ supplies
The new group 16 to VATA 1994, Sch 9 deals primarily with the cost-sharing exemption provision.
It is available when two or more organisations with exempt and/or non-business activities join together on a co-operative basis to form a separate, independent entity – a cost sharing group – to supply themselves with services at cost and exempt from VAT.
The exemption applies to supplies of qualifying services made by the representative member of the group to other members. They must be ‘directly necessary’ for the exempt and/or non-business supplies made by the individual qualifying member.
HMRC’s VAT Info Sheet 07/12 explains how the exemption can be enacted.
