The cost-sharing exemption is a new facility introduced by HMRC designed to assist organisations that cannot fully recover VAT, perhaps due to the VAT exempt supplies they make.

It is likely to be rarely required or used in connection with academies, as schools and colleges can generally find easier ways to avoid irrecoverable VAT.

However, it may be of assistance on occasion, perhaps when VAT on the cross-charges made for shared staff resources between entities (not within a MAT) mean that some irrecoverable VAT is created that would not have arisen if the costs had been incurred directly by each party.

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