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HMRC internal manual

VAT Government and Public Bodies

Section 33 bodies: recoverable VAT: exclusions

Specifically excluded from refund, under Articles 5 to 7 of the VAT (Input Tax) Order 1992 (SI 1992/3222), is VAT incurred on:

  • entertainment where a local authority is engaged in a business transaction
  • goods other than building materials included by a person constructing, and
  • the purchase of a motor car, excluding marked emergency service cars from 1 August 1995.

Recovery of VAT on the purchase of a car for a non-business purpose is subject to the same conditions that apply to cars used for business purposes. This was considered in R v Customs and Excise, ex parte Greater Manchester Police Authority (CA [2001] STC 406) (see also VATGPB4720). In this judicial review the court rejected the Greater Manchester Police claim that section 25(7) of the VAT Act 1994 was not caught by section 33(6). It therefore followed that the input tax ‘blocking order’ also applied to similar items bought by public bodies, and so generally denying VAT recovery under section 33.

Additional restrictions are applied by:

  • section 33(4) which restricts recovery by a lighthouse authority to VAT attributable to activities concerned with ’the provision, maintenance or management of lights or other navigational aids’ and
  • section 33(5) which restricts recovery for an appointed news provider to activities attributable to ‘the provision of news programmes for broadcasting by holders of regional Channel 3 licences (within the meaning of Part I of the Broadcasting Act 1990)’.