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West of Scotland Colleges Partnership v HMRC

In West of Scotland Colleges Partnership v HMRC (TC03746 – 20 June 2014) the FTT found that the cost sharing exemption did not apply.

The West of Scotland Colleges Partnership (WOSCOP) had been established as the colleges’ collective representative to access grant funding from the EU. The issue was whether the conditions for the VAT cost sharing exemption were satisfied (VATA 1994 sch 9 group 16). The VAT cost sharing exemption applies where two or more VAT exempt organisations join together to form a separate independent entity to supply themselves with services at cost price. Without the exemption there would be an irrecoverable VAT charge on those services.

The dispute related to the ‘exact reimbursement’ by members of their shares of joint expenditure. This was a condition for the exemption.

The FTT observed that the exact reimbursement rule could be met over a period of time and...

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