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HMRC internal manual

VAT Government and Public Bodies

Section 33 bodies: refund claims: un-registered bodies

Section 33 bodies can recover the VAT they incur on purchases made as part of their non-business activities. An un-registered body cannot recover the input tax it incurs on its business activities.

The provisions of Section 78(1)(d) of the VAT Act 1994 require us to refund a Section 33 claim plus statutory interest in the instance where there has been an unreasonable delay in our refunding their claim. The former V1-33 guidance refers to Do It Yourself claims for unregistered traders’ being paid late and the same circumstances would appear to apply here

Un-registered bodies use form VAT 126 to reclaim VAT on their non-business activities. This does not mention output tax but, in examining supporting schedules or other records, it may become apparent that an un-registered body has incorrectly charged tax on supplies it has made. Where this has resulted in the issue of a VAT invoice the position depends on whether the customer is likely to have recovered the VAT as input tax. If input tax is thought likely to have been recovered the un-registered body should be instructed to issue a credit note unless the tax involved is minimal