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HMRC internal manual

VAT Government and Public Bodies

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Section 33 bodies: capital projects and other adjustments: background

Prior to 1995 capital projects that resulted in mixed supplies, that is a mixture of exempt and non-business activities, were excluded from section 33 calculations. However, following the High Court decision in Haringey Borough Council (QB [1995] STC 830) capital projects giving rise to mixed supplies have been included.

This was subject to a transitional relief under which the calculation excluded projects:

  • whose costs exceeded £1 million that had been included in the capital programme, or otherwise approved, prior to 1 September 1995, or
  • costing no more than £1 million that had been included in the capital programme, or otherwise approved, prior to 1 April 1997.