Daily Insight: VAT exemption for sharers and... don't look after the pennies
It's been a busy week here at Daily Insight, where we've been touching on heady topics such as cryptocurrencies, the Big Four and the BBC. Today the focus is more on a bread-and-butter issue for accountants - VAT.
Following several recent European cases, the HMRC has produced a new brief on VAT exemptions for cost sharing groups (CSGs). It's aimed at smaller businesses that function in the public interest that can't by themselves afford to buy certain assets. Now they'll be able to form a CSG with other like-minded businesses and purchase a big item for their mutual benefit ... and be exempt from VAT.
The HMRC says: "This exemption allows small providers who can’t afford to acquire assets on their own account to benefit from the same overall VAT position as larger providers who can afford to purchase the assets themselves. Thus the more members of a CSG there are, the greater the potential savings and lower the costs per member of operating the relevant CSG.
"The CSE applies only in very specific circumstances and won’t cover all shared service arrangements." The exemption groups are:
- Postal service (Group 3).
- Education (Group 6).
- Health and welfare (Group 7).
- Subscriptions to trade unions and professional bodies (Group 9).
- Sport (Group 10).
- Fund raising by charities (Group 12).
- Cultural services (Group 13).
Tantalising question
And as it's Friday, I'm going to leave you with a tantalising question: Should the UK get rid of 1p and 2p coins? For what it's worth (about 17p), I'm all in favour. And so is Larisa Yarovaya, lecturer in accounting and finance at Anglia Ruskin University.
She argues: "Around 8 per cent of coppers are thrown in the bin every year. According to the Royal Mint, there are 11,430m 1p coins (worth £114.29m) and 6,714 2p coins (worth £134.273m) in circulation so 8 per cent would lead to substantial waste. Millions more end up behind sofas or tucked away in tins and forgotten about. Replacing them is surely a waste of money."
Quite. And that's before we even get to cryptocurrencies!
Have a great weekend.
