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Finance Act 2012

Details of the Section

3.Section 31 of VATA provides that supplies described in Schedule 9 are to be treated as exempt from VAT. The exempt supplies are itemised in a number of different groups in Part II of that Schedule in accordance with their subject matter (for example exempt supplies relating to land are itemised in Group 1). There is an index to the groups in Part 1 of Schedule 9.  There is currently no provision in VATA for the exemption contained in Article 132(1)(f) of the PVD.

4.Subsection (1) inserts a reference to a new Group 16 into the Schedule 9 index.

5.Subsection (2) inserts a new Group 16 (supplies of services by groups involving cost sharing) into Part II of Schedule 9 which describes the exempt supply as a supply of services by an independent group of persons subject to four conditions namely:

  • the members of the group are each engaged in exempt or non-taxable activities;

  • the supply is made for and directly necessary for those activities;

  • the group merely claims exact reimbursement for those services; and

  • relief from taxation is not likely to cause distortion of competition.

6.Subsection (3) inserts new subsection 31(3) to (5) into VATA, allowing the Treasury to make regulations imposing conditions in connection with the operation of the exemption in the new group 16 and to make consequential and transitional provisions in that connection (including amendment to primary legislation).

7.Subsection (4) sets out the effective date of the section.

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