The National Housing Federation (NHF) has been leading discussions with HMRC on keeping the valuable VAT exemption for housing association (HA) cost sharing groups (CSGs). In July, the NHF announced it has made some headway, with HMRC minded to retain this. Although it is stated that there are a few details to iron out before a formal policy announcement can be made,
this is very welcome news after years of uncertainty.
The VAT Cost Sharing Exemption continuing to apply to housing associations is important and good news for the sector because CSGs can have a substantial impact on the financial savings which HAs can make within their business. This in turn assists HAs in meeting their obligations under the Value for Money standard, enabling those savings to be utilised as part of development programmes to allow for the building of additional homes. It can also go some way to assisting HAs in complying with other areas of the regulatory framework, such as combining certain services which may streamline the operational aspect, as well as helping to de-risk.
The NHF’s announcement is very encouraging news for any existing CSGs and any HAs who are contemplating setting up a CSG. CSGs have achieved real savings for several HAs and we hope that many more will be able to benefit from these arrangements in the near future.
This article was co-written with Jo Loake, Head of Governance and Regulation at Croftons.
This article first appeared in Social Housing in July 2019.