Removal of VAT exemption for business research

The Charity Tax Group (CTG) is seeking comments on the removal of the VAT exemption for business research.  In summary, CTG reports that: 'UK VAT legislation presently allows VAT exemption for research which is provided by one university (and a limited number of other bodies) to another. The EU Commission has informed the UK that there is no legal basis for the exemption under EU law. The UK Government is therefore required to remove the exemption and it is planned that this will be effective from 1 August 2013. British Universities Finance Directors Group (BUFDG) and the Charity Tax Group have provided HMRC with estimates of the overall financial impact of these changes on current and future research contracts. The loss in VAT to the university sector is estimated to be in the region of £5-6m per annum.  HMRC has published Revenue and Customs Brief 38/12, to announce a consultation on the withdrawal of the exemption. The consultation responses will help HMRC in deciding whether or not there is a need to mitigate the impact and if so whether transitional arrangements could meet that need.' 

Read the full article on the Charity Tax Group’s website. They are inviting comments to be sent to [email protected] by 9 March 2013.