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HMRC internal manual

VAT Government and Public Bodies

From
HM Revenue & Customs
Updated
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Local authority education services: voluntary aided schools: payments into devolved funds

Although funding from the DfE is available only to the governing body, the governors may put this money into the same account as the school’s devolved funds. The devolved funds are those that are used to pay for the education that the local authority is statutorily obliged to provide and from which the local authority can recover the VAT incurred under section 33 (see VATGPB4000). The local authority cannot reclaim VAT on purchases made from the DfE grant. Where a voluntary aided school pays VAT inclusive grants from the DfE into these devolved funds there is a risk that the local authority might inadvertently reclaim VAT incorrectly.