VATGPB3310 - Non-business activities: distortions of competition: relevance

The question of competition will only be an issue in cases where:

  • an activity meets the normal business tests (see VBNB30200)
  • an activity is carried out by a public authority (see VATGPB2100) and under a special legal regime (see VATGPB3210 and VATGPB3220), and
  • the supply may be in competition, either actually or potentially, with private sector suppliers of similar goods or services.

If, and only if, an activity meets the usual business tests and is carried out under a special legal regime, will it be necessary to consider whether it is in competition with other similar suppliers and if it causes a significant distortion of competition.

Even where a charge is made, some activities, such as welfare services (see VATGPB8100), are treated as non-business. This is because although the law requires the public body to carry out the activity, it also allows a charge to be made to beneficiaries as a contribution towards the costs of providing the service.