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
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.
Projects
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.
Posts
HERBi shared services tool unveils enhanced functionality
The web-based HERBi tool which allows higher education institutions to explore the benefits of sharing services is now bigger and better. Project manager Simon Perks tells us about these improvements, which aim to make HERBi more responsive to the needs of users across the sector.
Implementation of Cost-Sharing Exemption in Universities
N8 universities have been working towards utilisation of the VAT Cost-Sharing Exemption (CSE) for sharing of equipment through the development of an approved Cost Sharing Group (CSG) model. By using an existing shared asset - N8 high performance computing - as a model facility for setting up a CSG, the N8 hoped to demonstrate its value and viability.- Cost sharing benefits outweighed by risks and costs, says N8 Research PartnershipA report by the N8 Research Partnership concludes the benefits of university 'cost sharing exemption' are outweighed by risks and costs, after running a cost sharing group for universities which share equipment. This press release produced by N8 following the two year project claims that too many legal and financial hurdles exist
- Ensemble purchasing: mighty oaks from little acorns grow
Smaller institutions in London are joining forces to get bigger bang for their buck from procurement. Kat Humphries introduces Ensemble Purchasing, a new cost sharing group dedicated to procurement. - University and council publish cost sharing group options
A HEFCE-funded study into establishing a cost sharing group (CSG) to deliver VAT-exempt IT services to Portsmouth schools has been published. The study by the University of Portsmouth and Portsmouth City Council investigates ways of sharing resources and the demand for a not-for-profit CSG. - Portsmouth Cost Sharing Group Investigation
In April 2014 HEFCE gave an award to the University of Portsmouth to explore the feasibility of setting up a cost sharing group to deliver IT services to education providers across Portsmouth, in collaboration with Portsmouth City Council. This report, published in February 2016, sets out options for sharing resources with potential participants. - HERBi shared services tool goes live
A web-based tool that allows higher education institutions to explore the quantitative and qualitative costs and benefits of sharing services is now live. Project manager Simon Perks tells us more about how HERBi can help you. - New Hefce-funded project models costs and benefits of sharing services
The shared services delivery partner of Falmouth University and the University of Exeter is starting work on an exciting new project to measure, analyse and model the costs and benefits of collaboration between UK higher education institutions. Project manager Simon Perks tells us more. - Our first year as a cost sharing group
The Kingston City Group (KCG) Consortium, which provides internal audit and management assurance needs to higher education institutions in London and the south east, was the first fully-operational cost saving group in the sector. KCG’s managing director Maria Vetrone shares some of the experiences from its first year of operation. - 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. - Portsmouth University investigates sharing IT facilities with city schoolsPortsmouth University, together with Portsmouth City Council, has won funding from the Higher Education Funding Council (Hefce) to investigate ways of sharing resources.
- Hefce funds HE Shared Legal VAT cost sharing group projectHE Shared Legal – until recently, a HEFCE-funded pilot project - has made a successful application for a portion of the grant funding offered by HEFCE last year in relation to VAT cost sharing group projects.
- Kingston City Group – forming a cost sharing group
The Kingston City Group (KCG) Consortium became a Cost Sharing Group (CSG) on 1 August 2013 under the UK Finance Act 2012 and is the first fully operational CSG in this sector. KCG provides services to the member institutions fully exempt of VAT, thus providing real cost savings. Maria Vetrone is the Managing Director of KCG and she shares some of the lessons being learned along the way. - Cost sharing groups and VAT exemption: developing good practiceHefce has published a circular letter inviting bids for funding for developing and disseminating good practice in shared services; specifically in applying the Value Added Tax (VAT) cost sharing exemption, as implemented in the Finance Act 2012. The total value of the funding available is £250,000. We anticipate funding up to 10 projects, with the level of funding depending on the scale and outcome of each project. All Hefce-funded institutions are eligible to apply, including further education colleges offering higher education. The deadline for proposals is noon on Monday 16 December 2013.
- VAT exemption for cost sharing groups: new guidance from Hefce
HEFCE has published guidance on VAT exemption for cost sharing groups delivering shared services. It includes illustrative examples of cost sharing groups and alternative delivery structures. - VAT cost sharing exemption – a spur to shared servicesThe Government’s VAT cost-sharing exemption presents a major opportunity for the higher education sector to explore the benefits of sharing services, says Steve Butcher, Head of Procurement and Shared Services at Hefce.
