Cost sharing groups

About cost sharing groups

The higher education sector has been seeking to become more efficient by developing shared services, with the support of the Higher Education Funding Council for England (HEFCE).

However, when universities and colleges shared services in the past, these activities could attract Value Added Tax (VAT). Paying this tax often had the effect of eliminating the cost-savings of sharing the services.

HEFCE has worked with the sector and the British Universities Finance Directors’ Group (BUFDG) to encourage the government to implement the EU cost-sharing exemption. 

This was introduced in the Finance Act 2012 and allows organisations called ‘cost-sharing groups’ to supply VAT-exempt services to members.


Guidance on the application of this legislation to higher education has been drafted in consultation with the sector and in collaboration with BUFDG and Universities UK. This guidance will be regularly reviewed and updated with illustrative examples.

Steve Butcher of Hefce talks about VAT exemption for cost sharing groups:

Click “Playlist” to browse other videos from this shared services panel discussion webcast on 3 July 2013.


Five projects have been set up to provide good practice on the use of cost sharing groups in the higher education sector. These are:

  • HE shared legal services: HE Shared Legal provides ad hoc and generic legal guidance on a subscription basis and assists with the selection, engagement and instruction of external legal law firms.
  • Development of a cost-benefit-analysis model: FX Plus, the shared services delivery partner of Falmouth University and the University of Exeter, is developing a cost-benefit analysis model to help institutions maximise the benefits of sharing services.
  • Asset sharing: The N8 universities – a collaboration of the eight most research-intensive institutions in the north of England – are developing policy and practice to support equipment sharing.
  • Facilities management: The University of London is establishing a cost-sharing group to deliver facilities management, which will provide a better and more consistent service for students at London institutions.
  • IT shared service across education providers: The University of Portsmouth will provide IT services to educational institutions in and around Portsmouth with partners from the further education and schools sectors.