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HMRC internal manual

VAT Education Manual

Local authority (LA) schools: governors acting as agents of the local authority

There are certain circumstances when the local authority is entitled to recover VAT incurred under section 33 of the VAT Act 1994 on purchases made by the governors:

  1. the local authority can recover VAT incurred when the governors make a purchase acting as the agent of the local authority - that is, purchases made using money from the delegated budget or using local authority central funds.
  2. The local authority can recover VAT on goods and services bought for the school using non-LA funds, such as donations, provided that the school opts to donate the money to the local authority and the latter buys the goods and services itself. The local authority must meet the conditions set out in VATGPB VAT Government and public bodies.

In other words the local authority must

### Step ### Action
1 Place the order
2 Make the purchase itself
3 Receive the supply
4 Receive a tax invoice addressed to it
5 Make payment
6 Use the goods and services for the educational purposes of the school
7 Retain ownership and adequate records


This route is not available to foundation schools in respect of any grants they receive for construction works they receive direct from the DfES, rather than the local authority. This is because such funds belong to the governors and not the local authority.