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HMRC internal manual

VAT Cost Sharing Exemption Manual

From
HM Revenue & Customs
Updated
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How the conditions are to be interpreted: Distortion of competition: What are the practical implications of the Taksatorringen Case?

Any arrangement or interaction between a CSG and a commercial operator will need to be carefully considered as such associations are more likely to lead to distortions of competition under the terms of the exemption.

HMRC would not normally expect a third party commercial supplier to be able to meet the qualifications for membership of a CSG as they are generally fully taxable organisations who would not qualify for membership. Similarly a third party commercial provider could not act as a CSG unless it was solely constituted of (was fully owned and controlled by) members who themselves qualify for CSG membership. However should a commercial outsourcer qualify for CSG membership it cannot use that membership qualification to take advantage of the exemption for its commercial outsourcing activity.