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HMRC internal manual

VAT Government and Public Bodies

Police authorities: specific activities: contracted-out vehicle removals

Police forces have powers to remove and, where appropriate, store vehicles. This can follow road traffic accidents, breakdowns blocking the highway and recovery of stolen vehicles. Any associated statutory fees are outside the scope of VAT when imposed on the motorist or the owner of the vehicle.

The task of removing vehicles is now commonly contracted-out by the police to local contractors. These arrangements often include the collection of fees by the contractor on behalf of the police. Where this occurs the fees are not consideration for any supply by the contractor to the motorist so they are outside the scope of VAT.

The contractor may be entitled to retain some or all of the fees they have collected. Where this occurs the retained amount represents consideration for a supply of recovery services by the contractor to the police and is liable to VAT at the standard rate. As well as accounting for VAT, the contractor is required to issue a VAT invoice to the police who are entitled to recover the VAT under section 33 (see VATGPB4000).