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HMRC internal manual

VAT Government and Public Bodies

HM Revenue & Customs
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Non-business activities: whether provided as a public authority: statutory obligation

In this guidance we use the term ‘statutory obligation’ as a form of shorthand. It means that the relevant legal provision either compels a public body to carry out an activity or, if the provision is permissive, requires the authority to carry it out in a particular way that is different to that in which private sector providers might do so.

This contrasts with statutory provisions that do no more than permit a public body to carry out activities which are also carried out in the private sector and do not determine how the activities should be carried out. These activities will be by way of business because they are not carried out under a special legal regime (see VATGPB3220).

In the case of Norwich City Council (VTD11822), the Council was clearly a body to which Article 13(1) might apply and the question was whether the activity fell within the Article because it was governed by a special legal regime. At issue was whether income received from businesses sponsoring various Council events was attributable to its statutory, that is to say non-business, activities.

Although it was accepted that the proceeds of the sponsorship were used in support of the Council’s statutory functions, the appeal was dismissed on the grounds that the sponsorship deals were not in themselves part of the statutory functions of the Council. They were not governed by a special legal regime but instead they were carried out under the same legal provisions as would apply to the private sector.