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HMRC internal manual

VAT Government and Public Bodies

Section 33 bodies: local authorities: requirement to register

Section 42 of the VAT Act 1994 requires all local authorities making taxable supplies to register for VAT, whatever the value of those supplies. But this does not apply to other section 33 bodies. Local authorities are defined in section 96(4) of the Act (see VATGPB4210).

Nevertheless, discretion may still be applied in deciding whether a local authority needs to register. If it is unlikely that registration would result in output tax of more than £1,000 per year and this arises from activities such as occasional sales of assets that have reached the end of their useful life, the requirement may be waived. On the other hand, this will not be appropriate if there is evidence of a steady and regular level of business activity, even though the output tax resulting from registration might be less than £1,000.

Where registration is waived the authority obviously does not charge output tax on the business supplies it makes. But, by the same token, it is not entitled to recover the VAT it incurs in making those business supplies. Waiver of registration should be confirmed in writing. See also VATGPB4920.