Cost sharing group’s VAT claim rejected by tax tribunal

A cost sharing group (CSG) recently had its claim for VAT repayment rejected on appeal. Neil Hunter of HE Shared Legal explains the importance for CSGs of following guidance closely and keeping good records.

The First-tier Tribunal recently rejected a claim for repayment of VAT by a CSG, on the ground that it could not demonstrate that there had been “exact reimbursement” of their share of the group’s expenses.

According to the case report, the record keeping of West of Scotland Colleges Partnership, the appellant, appeared to have been somewhat deficient. However, it may also be significant that the claim related to a period before the CSG exemption was introduced into UK law, and therefore guidance on the subject was limited.

Nevertheless, this case emphasises the need for:

• Strict adherence to the conditions of the CSG exemption
• Full and accurate record keeping, in order to provide a ‘clear audit trail’ of the relevant transactions

This subject is of particular interest to HE Shared Legal in view of our plans to convert the service into a CSG with effect from 1 May 2015.

We shall circulate further information – both commercial and technical – about this project in due course. In the meantime, we take the opportunity to remind readers of the HEFCE online guidance for the sector on CSG exemption from VAT.

Neil Hunter is principal lawyer at HE Shared Legal, a national shared legal service for UK higher education.