Policy paper

VAT: refunds of non-recoverable VAT for the Old Oak and Park Royal Development Corporation

Published 28 January 2016

Who is likely to be affected

The measure applies to the Old Oak and Park Royal Development Corporation (OPDC).

General description of the measure

This measure will specify the OPDC as a body to which section 33 of the VAT Act 1994 applies. This will entitle the OPDC to refunds of VAT in respect of their non-business activities.

Policy objective

The government’s objective is that irrecoverable VAT should not be a cost borne from local taxation. This is achieved by refunding to named bodies the VAT they incur on purchases made to support their non-business activities.

Background to the measure

The OPDC was established on 1 April 2015 as a Mayoral development corporation under the Localism Act 2011 and is a designated Mayoral development area, which is located within the boundaries of the London Boroughs of Brent, Ealing and Hammersmith and Fulham. The statutory planning functions for these boroughs have also been transferred to the OPDC.

Local authorities carrying out statutory functions can recover the VAT incurred on their non-business activities under the section 33 VAT refund scheme. To give OPDC equitable treatment they are to be included in section 33(k) of the VAT Act 1994.

Detailed proposal

Operative date

It is intended that this Statutory Instrument will come into effect from 1 April 2016 subject to the negative resolution.

Current law

Section 33(1) requires the Commissioners of HM Revenue and Customs (HMRC) to refund to bodies the VAT they incur on purchases, acquisitions and imports made in connection with their non-business purposes. Some of these bodies are named in section 33(3), some are specified under the power to do so in section 33(3)(k).

Proposed revisions

The Treasury is using its power under section 33(3)(k) to specify the OPDC as a body to which section 33 applies, and which will therefore be entitled to reclaim VAT under section 33(1).

Summary of impacts

Exchequer impact (£m)

2015 to 2016 2016 to 2017 2017 to 2018 2018 to 2019 2019 to 2020 2020 to 2021
- nil nil nil nil nil

This measure is not expected to have an Exchequer impact.

Economic impact

The measure is not expected to have any economic impacts.

Impact on individuals, households and families

This measure will have no direct impact on individuals and households as it applies only to the OPDC.

This measure will have no impact on family formation, stability or formation.

Equalities impacts

This measure will have no impact on any equality group.

Impact on business including civil society organisations

This measure is expected to have no impact on businesses and civil society organisations. This is because the change only applies to the OPDC.

Operational impact (£m) (HMRC or other)

VAT refunds will be dealt with by established HMRC procedures. There will be no additional operational resource cost.

Other impacts

Other impacts have been considered and none have been identified.

Monitoring and evaluation

A dedicated unit within HMRC deals with the VAT issues of the OPDC and normal audit activity will monitor whether the changes are working as intended.

Further advice

If you have any questions about this change, please contact Mustafa Noor on Telephone: 03000 579 656 or email: mustafa.noor@hmrc.gsi.gov.uk.

Declaration

David Gauke MP, Financial Secretary to the Treasury has read this Tax Information and Impact Note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.