VATGPB8680 - Other local authority activities: miscellaneous (A to E): election and returning officer’s expenses

Local Elections

Under section 35(1) of the Representation of the People Act 1983, “every district council shall appoint an officer of the council to be the returning officer for the elections of councillors of the district and an officer of the council to be the returning officer for elections of councillors of parishes within the district.” Other types of elections are covered by similar provisions within the RPA 1983.

Returning Officers (RO) are statutorily independent of the local authority and are ultimately responsible for the efficient and effective running of elections. They are also responsible for accounting for the expenses incurred for the conduct of elections in their area. If the RO directly incurs costs for an election, they can make a claim for reimbursement from the local authority.

Local authorities have a statutory obligation to appoint a RO for their area. As such, where local authorities incur costs on behalf of the RO, who uses the goods and services for no cost, they can recover that VAT under section 33 (see VATGPB4000). This will include the purchase of any equipment needed for the running of the elections.

If the district or county council organises an election for another tier of local government, it may recover any VAT incurred in arranging the ballot under section 33. If it then charges the other authority for the election expenses, this is not a business activity, and therefore no VAT is charged.

UK Parliamentary Elections

At UK Parliamentary elections, ROs are statutorily independent of the local authority, act on behalf of the Crown, and are accountable to the courts.

UK Parliamentary elections are funded out of the Consolidated Fund. Until recently the responsibility for managing those funds was with the Cabinet Office, but this function has now transferred over to the Department for Levelling Up, Housing and Communities (DLUHC). ROs are by law entitled to reimbursement for their services in relation to the delivery of UK Parliamentary elections, to reflect their statutory independence from the local authority, and reimbursement is made through the Consolidated Fund.

Where local authorities are required by law to provide their resources, for example polling places in a school hall, any reimbursement from the Consolidated Fund is not subject to VAT. In such instances, any VAT incurred on the provision of a local authorities’ resources is recoverable by the local authority under section 33.

Similar treatment applies to any other services provided under a statutory requirement. However, the hire of non-council premises or portable buildings, for example, or the provision of refreshments or security, are business activities to which the standard VAT rate will apply. If the RO has received goods or services from sources other than the local authority, any VAT incurred is not recoverable by the local authority and should be included in any reimbursement from the Consolidated Fund.

The RO can seek reimbursement from the Consolidated Fund, in part or in full, for any expenses relating to the purchase of election equipment such as polling booth screens and ballot boxes, the services of ballot paper printing or the hire of portable buildings. However, only the share relevant to UK Parliamentary and Police and Crime Commissioner (PCC) elections can be reimbursed from the Consolidated Fund. In many cases, equipment and other services will be bought for the RO by the local authority, such as polling booths. If the items will be used in different types of elections, then the local authority can recover the VAT in full, with no onward charge to the RO. If the items are to be used solely for a UK parliamentary election, the local authority cannot reclaim the VAT under section 33 but the RO can make a claim for the gross costs from the Consolidated Fund.

If items are bought exclusively for general elections, then a local authority can only recover VAT to the extent that it recharges it to the RO as the buying agent. The VAT recharged to the RO should form part of their election expenses accounts that will need to be submitted to the Elections Claims Unit (ECU) at DLUHC (previously part of the Cabinet Office) within six months from the announcement of the election results. This has been a legal requirement since 2014.

Police & Crime Commissioners Elections

Where Council Officers act as ROs for PCC elections, whether held as a standalone election or combined with local elections, the role and responsibilities of the RO are not to the council but are directly accountable to the courts as an independent statutory office holder.

PCC elections are also funded from the Consolidated fund and as such any claims for reimbursement of items or services used exclusively for the PCC elections should include the incurred VAT. Where the expenditure relates to items or services that can be used at other elections then the above provisions apply. Expenses claims should be submitted to ECU at DLUHC. Once ECU has received all the necessary evidence and scrutinised the expenses claim they will make a payment to the RO to reimburse them for any expenses reasonably and necessarily incurred for the effective and efficient running of the elections.

Joint elections

Local elections

Full VAT recovery is available on all expenditure attributed to local elections. Any recharges to another tier of authority (such as a District Council) would be a non-business activity.

Local Elections with CA Mayoral Elections and PCC Elections

Full VAT recovery is available on all expenditure attributed to local elections and Combined Authority Mayoral Elections. However, VAT exclusively attributable to PCC Elections is non-recoverable, and gross reimbursement should be sought from the Consolidated Fund.

Local & Parliamentary Elections

VAT recovery is available on all expenditure attributed to local and parliamentary elections as per the above relevant sections of this guidance.

Where the local authority purchases goods or services for the RO solely in respect of the parliamentary election, they should seek reimbursement of the gross costs from the RO, via the Consolidated Fund. For reimbursement of local election costs, see the relevant section above.