The Government’s VAT cost-sharing exemption presents a major opportunity for the higher education sector to explore the benefits of sharing services, says Steve Butcher, Head of Procurement and Shared Services at Hefce.
The HE sector has lobbied for more than ten years for the implementation of the EU cost-sharing exemption, which would enable higher education institutions and organisations in the voluntary sector to avoid the VAT that used to be attracted when they shared services. The Government has now implemented the exemption in the Finance Act 2012, and HMRC has issued guidance.
Gathering good practice
HEIs have been co-operating in many areas for a long time to bring about service improvements and achieve efficiencies, and we would like to capture the learning from those pioneering activities so that more can benefit from the experience of others.
In autumn 2013 we plan to issue a circular letter inviting universities and colleges to engage with us in gathering good practice. We are looking to fund up to ten projects and £250,000 will be available. Proposals from shared services that have been working for some time are our primary targets, but we will welcome proposals from new groups that are starting out in this new environment of VAT-free cost sharing groups. We can support challenging projects and others can benefit from the pathfinding.
What we are looking for
Areas of development work are of special interest to us in developing this good practice, such as engagement with HMRC, pensions, arrangements for staff, governance and management, TUPE, costing and pricing.
We also seek innovative dissemination strategies, and we will expect each project to engage fully with the Efficiency Exchange during the period of funding, so that its findings are made available as soon as possible.
At the end of the project we will meet with each project team to conclude the project and gather material which we will then incorporate in our guidance on cost-sharing groups.
Helping to shape your proposals
Our plans for distributing this funding will involve assessment against published criteria, but we recognise that this is new territory for everyone and we are happy to work with you to shape your proposal in the weeks before submission. We have assigned staff to advise those thinking of bidding; they won’t be part of the assessment team, but they will have a good grasp of what we are looking for.
Full details will be available in the circular letter inviting proposals, which we expect to issue in mid October, with a deadline for submissions in December. We expect to be gathering the learning in January 2015.
In the meantime, please view this video playlist which includes my presentation on cost-sharing groups and the panel discussion on ‘Shared services to enhance the student experience’ which were streamed live on 3 July.
Update September 2013
HEFCE has published guidance on VAT exemption for cost sharing groups delivering shared services. It includes illustrative examples of cost sharing groups and alternative delivery structures.