Lobbying on behalf of the third sector appears to be having an effect, after Chancellor of the Exchequer George Osborne announced plans for VAT changes in his autumn statement. The move could allow charities to benefit from VAT exemptions when purchasing shared services, including back office outsourcing, according to reports.

A note produced by Her Majesty’s Revenue and Customs to support Mr Osborne’s statement explained: “the exemption can be used, amongst others, by organisations such as charities working together to achieve economies of scale. Under current UK legislation, a VAT cost can arise creating a barrier to the sharing of services. The exemption, once implemented would in certain circumstances remove this VAT barrier.”

“We’re very pleased the government has planned this exemption,” said Colin Gray, managing director of DDC Outsourcing Solutions. “We’re hoping that more charities could be covered by this targeted relief; there are proven benefits to charities of purchasing shared services like back office administration and a VAT exemption will provide an added incentive.”

The Chancellor’s statement was also indicative of a need for charities to be given every help possible if they are to assist in the delivery of public services. “Charities providing services that otherwise would be provided by the public sector should receive the same relief,” added Colin. ”The sector should have the same tax status that public sector organisations have.”