Other local authority activities: housing and community projects: group repair schemes and block improvement grants
Section 65 of the Housing Grants, Construction and Regeneration Act 1996, gives powers to local authorities in England and Wales to carry out improvements to the exterior of blocks and terraces of private sector housing within their area. These improvements are undertaken with the permission of the property owners and are commonly termed group repair schemes.
Under an approved scheme an authority will normally receive a grant from central government and will require a compulsory contribution towards the costs of the planned works from the participating property owners. This compulsory contribution is outside the scope of VAT. Any grants the authority may receive direct from central government are also outside the scope of VAT. Whether it employs its own labour or hires an outside contractor to do the work, the authority can recover any VAT incurred under section 33 (see VATGPB4000).
Additionally the authority may be asked by the owner of a property to provide further works, over and above those planned, for which a separate charge is made to the owner. VAT is due as the supply is made in the course of business by the local authority. Any VAT incurred in making business supplies is recoverable as input tax under the normal rules.
It should be emphasised that this treatment only applies to works carried out under the powers mentioned in the opening paragraph.