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HMRC internal manual

VAT Government and Public Bodies

Section 33 bodies: recoverable VAT: trust funds

Refunds cannot generally be claimed on purchases paid for using monies from trust funds. Exceptionally claims can be made where the payment comes from the funds of a trust of which the section 33 body is the sole managing trustee, for example a village hall. To be eligible for a refund:

  • the body must be acting as sole trustee without payment
  • the activities of the trust must be so closely related to the functions of the body as to be virtually indistinguishable from them
  • the claim must relate to the non-business activities of the trust, and
  • purchases made from the funds of the trust must not be on a scale that could distort competition.

In acting as trustee the body may be what is known as a ‘custodian’ trustee, where its function is simply to hold the property of the trust. Day-to-day management is usually in the hands of a management committee that is comprised of other trustees. Where a body is the sole custodian trustee it is not able to recover any VAT under section 33 unless it is also the sole managing trustee.