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HMRC internal manual

VAT Government and Public Bodies

Other local authority activities: housing and community projects: repair and maintenance of dwellings

Repairs to demised dwellings for no charge

Repairs or improvements to its demised housing stock without charge to tenants are usually undertaken because the local authority is responsible either by statute or under he tenancy agreement. Where this is the case the activity is part of the non-business activity of providing public sector housing. Any VAT incurred by the local authority can be recovered under section 33 (see VATGPB4000).

Repairs to demised dwellings where a charge is made

Repairs charged to a tenant represent a supply of services to that tenant. They are liable to VAT at the standard rate. However:

  • Works in default are not liable to VAT (see VATGPB8360)
  • Charges for repairs and making good after a tenant has vacated premises, which have been left in an unfit condition, represent compensation and so are not liable to VAT.
  • Charges made to third parties to recover the costs of repairing damage to council dwellings are similarly treated as compensation.

VAT incurred in carrying out repairs to dwellings may be recovered, either as input tax or under the section 33, as appropriate.