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HMRC internal manual

VAT Government and Public Bodies

Other local authority activities: miscellaneous (N to Z): youth centres

VAT recovery
Liability of local authority youth club income


A youth centre will fall into one of two categories. If it is part of the local authority any purchase from its own funds is made by the local authority. The authority may therefore reclaim any VAT incurred, subject to the normal rules. If income from taxable activities of the centre passes to the local authority, then the authority must also account for VAT.

On the other hand, youth centres with charitable status are independent of the local authority. Consequently the authority would not normally be entitled to recover VAT on any of the costs incurred. However, in some cases, independent youth centres may donate funds to the local authority for a specific purpose. Where this occurs the local authority is eligible recover the VAT so long as it:

  • makes the purchase, by placing the order and so on
  • retains ownership
  • uses the items purchased for its own non-business purposes, and
  • keeps sufficient records of the purchase and the purpose for which it was made, so that it can easily be identified.

If these conditions are not met the money provided by the youth centre represents consideration for a supply by the local authority and the authority must account for VAT.

VAT recovery

Youth centres incur a range of costs. Examples of the VAT recovery position are as follows:

Light and heating

The VAT on expenses like gas and electricity is only recoverable under section 33 (see VATGPB4000) where the youth centre is part of the local authority. Even if an independent centre donates money to cover the costs the supply is to the independent centre, rather than the local authority which is unable to retain ownership.

Repairs and maintenance

The VAT treatment of day-to-day repairs and maintenance to buildings and grounds is broadly similar to light and heating. However, if the local authority holds the freehold or lease on the premises and does not charge the independent youth centre for its use, the authority is normally entitled to recover any VAT incurred.

A local authority can also recover the VAT if it charges the independent youth centre rent and opts to tax. It may also be able to recover VAT under partial exemption rules even if there is no option to tax.

Where the youth centre funds the work the conditions outlined in the introductory paragraph must apply if the local authority is to recover the VAT. This is normally the case so long as the work is ordered in the name of the local authority.


If a youth centre purchases a minibus the VAT treatment follows the introductory paragraph. Purchase of a minibus by a local authority using donated funds is subject to the same conditions for VAT recovery by the local authority under section 33.

The local authority can also recover VAT under section 33 where:

  • use of the minibus is pooled, so that it is available for use by more than one youth centre
  • it carries the local authority logo
  • the local authority treats it as an asset covering repair and maintenance costs, and
  • the authority does not charge youth centres for its use.

Where this applies the authority must account for output tax when the vehicle is sold.

An independent youth centre will often buy a minibus using grants provided by the local authority. The authority neither receives the supply nor makes payment from its own funds. It cannot therefore recover the VAT under section 33. The same applies where an independent youth centre meets its own fuel and maintenance costs.

If a local authority charges for use of a minibus any VAT it incurs relates to a business activity. It is not recoverable under section 33 but may represent input tax under the normal VAT rules. For more information see the VAT Transport Manual (VTRANS) (external users can find the guidance at

Fixtures and Fittings

A local authority is entitled to recover the VAT it incurs at its own youth centres on fixtures and fittings, including sports equipment. If the local authority uses donated funds to make the purchase it may recover VAT so long as the conditions described at VATGPB4445 are met. This means that the items must become assets of the local authority and be available for use by other youth centres. A local authority may also recover the VAT it incurs on purchases made from its own funds and then freely given away to independent youth centres.

Private fund income

Some local authority youth centres may undertake activities independently of the local authority. Any income received as a result is ‘private fund’ income. This is normally paid into a separate account and does not form part of local authority funds.

The private fund is a separate entity for VAT purposes and the local authority is not entitled to recover the VAT incurred on any private fund purchases. This is because the costs are not part of the authority’s non-business activities. Equally, the authority does not have to account for output tax on supplies made by the private fund. However, if the level of taxable supplies made by the private fund exceeds the registration limits, it must register for VAT and account for VAT in its own right.

Liability of local authority youth club income

Local authority youth centres are provided under the Education Act 1996 (as amended). As this is a special legal regime membership fees and subscriptions are non-business. Activities and events that are separately charged for are also generally non-business.

Social evenings, outings and similar events

Income from activities arranged by the youth service for the members of the club is non-business. However, this does not apply to events organised by others. For example, if the youth service merely arranges for its members to be able to buy discounted tickets from an event organiser, that remains a business supply by the event organiser to the individuals who take up the offer.

Neither will it apply to events and activities attended by anybody not covered by the youth service unless the numbers are minimal. For example non-business treatment will not apply to family outings where youth club members do not make up the significant majority. On the other hand, if an outing involves a relatively small number of parents acting as helpers, the event can be treated as non-business for all those attending.

Coin operated machines

The provision of game, amusement and entertainment machines form part of the youth service so any income is non-business.

Tuck shops and cafes

So long as sales on club premises to members are made at, or below, their overhead inclusive cost they can be treated as non-business.