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HMRC internal manual

VAT Government and Public Bodies

HM Revenue & Customs
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Other local authority activities: miscellaneous (N to Z): supplies of staff

Basic principles

A section 33 body (see VATGPB4000) that supplies the services of its staff under the same legal conditions that apply to the private sector is not acting in its capacity as a public authority. The supply it makes is therefore a taxable business activity. However, in common with private sector businesses, these supplies were, until April 2009, potentially subject to the VAT treatment described in the Supply & Consideration manual (VATSC06000) (external users can find this guidance at

By contrast, if the section 33 body makes the supply under a special legal regime it does so in its capacity as a public authority (see paragraph VATGPB2300)

Examples of business activities

Taxable business activities include secondments of staff by:

  • a police authority to another for purely administrative purposes
  • a local fire service to an outside organisation to advise on fire safety matters
  • a local authority Direct Labour Organisation (DLO) to enhance the management team of another DLO, or
  • an LEA to an examination board to advise on methods of assessment.

In all these cases, the section 33 body supplies the service in potential competition with those in the private sector rather than acting under a special legal regime.

The supply of teaching staff, including classroom assistants, by one eligible body to another for provision of education qualifies as an exempt supply of education under item 1(a), Group 6 of Schedule 9 to the VAT Act 1994. In addition to local authorities eligible bodies include universities, further education colleges, schools (as defined in law), health authorities, government departments and non-profit making organisations that meet certain criteria. These are all defined in note 1 to the group.

For more information about eligible bodies see the Education Liability manual (VATEDU) (external users can find the guidance at

Examples of non-business activities

A police authority may provide normal policing assistance to another force under section 24 of the Police Act 1996, for example in connection with an ongoing investigation. It may also second officers under section 23 of the Act to the Serious Organised Crime Agency, the National Crime Squad or the National Criminal Intelligence Service. In these examples the law requires the police authority to supply the services of its officers. Similar services cannot be supplied by the private sector. As there is no competition with the private sector the activities are treated as non-business.

In providing specialised fire service training the Fire Service College obtains experienced serving officers under secondment from local fire brigades to act as instructors in advanced safety and rescue techniques. The authorities supply this service under Part 1 of the Fire and Rescue Services Act 2004. No other organisations have the necessary expertise to offer an equivalent service to the college. The local brigades provide the service in their capacity as a public authority and so the secondments are non-business.

Agreements to release rather than supply staff

Sometimes, rather than supply the services of its staff the authority will agree to their release. This frequently occurs where a teacher undertakes A level or GCSE exam work. A teacher who volunteers to undertake these duties will make all the necessary arrangements with the examining board. They will have two discrete contracts, one with the authority and one with the examining board.

The local authority, who may continue to pay the salary of the teacher for administrative reasons, will gain no specific advantage from the arrangement. It plays no role other than agreeing to the release of the teacher concerned. A similar situation may apply where staff are seconded to other government departments, or commercial companies, for career development purposes, albeit the authority may have more involvement in making the arrangements.

Secondments in circumstances where the secondee has two discrete contracts do not amount to a taxable supply of the services of staff by the authority and any reimbursement of salary is not liable to VAT. However, any administration charge made by the authority is consideration for a supply of payroll services on which VAT is to be accounted for.