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THE: Lift tax-barrier to shared services, Alliance pleads

Flexible VAT framework could save millions of pounds, mission group says. Simon Baker reports

Tax reforms that would encourage universities to share services and potentially save millions of pounds are now crucial as the sector faces severe funding cuts, the director of a mission group has said.

Libby Aston, of the University Alliance, said that slow progress on a more “flexible framework” for VAT could hinder the potential for efficiency savings in the sector.

Currently, institutions that want to share activities such as payroll management must save at least the cost of VAT – 17.5 per cent – as although universities are classed as VAT-exempt, they cannot reclaim the tax paid on the services they buy.

The previous government said in the Budget statement in March that it would “consider options” for resolving the issue, but there is growing frustration that any change may not come in time to help tackle funding cuts.

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