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HMRC internal manual

VAT Government and Public Bodies

Local authority education services: voluntary aided schools: paragraph 6 of guidance on section 33 recovery agreed with the Department for Education

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Paragraph 1 to 4 Section 33 bodies VATGPB7530 Paragraph 5 VAT & Expenditure VATGPB7540

HMRC Guidance for Local Authorities and Voluntary Aided Schools - VAT recovery under section 33 VAT Act 1994 (continued)

6. VAT recovery on expenditure

As described above, generally the local authority can recover VAT (under section 33 of the VAT Act 1994) where it has a responsibility for the expenditure.

The local authority cannot recover VAT that a VA school governing body has incurred on expenditure for which the governing body is responsible even when payment is made from the delegated budget or goes direct from the local authority to the supplier. The same principle applies with grants awarded by the Department for Education.

Furthermore, VAT is not recoverable on revenue items when the Governing Body uses its own funds, such as donations or grants awarded solely to the school, or from local fundraising such as from the Parent and Teacher Association. In these circumstances, the school makes these purchases as principal and not as an agent of the local authority. VAT on such revenue purchases can only be recovered by the local authority if the governing body donates the funding to the local authority and the local authority procures the supply as detailed in Item 2 in Annex B.

The flowchart at Annex A and the table of examples at Annex B are intended to give further guidance on circumstances when VAT may and may not be recovered, but are not intended to be exhaustive. In cases of doubt, governing body or local authority are advised to discuss the matter with HMRC.

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Paragraph 7 Insurance VATGPB7560 Annex A Flowchart to determine VAT recovery on revenue and capital expenditure VATGPB7570
Annex B Examples of recoverable VAT VATGPB7580