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HMRC internal manual

VAT Government and Public Bodies

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


A legal duty has been placed on local authorities with social services and education responsibilities to form a Youth Justice Board in partnership with other local agencies. These other agencies are the chief officers of police, police authorities, probation committees and health authorities.

Youth Offending Teams (YOTs) have been established under sections 37 to 42 of the Crime and Disorder Act 1998. Their purpose is to create a local structure of teams and services to deal with young offenders.

Each YOT must contain a:

  • social worker
  • probation officer
  • police officer
  • nominee of a health authority in the local authority area, and
  • nominee of the local authority’s Chief Education Officer.

It may also include other people where the local authority thinks it appropriate.

VAT treatment

The local authority receives funding for the project from the Home Office. The partners, who may, or may not, also receive Home Office funding, are responsible for their share, such as staff and any associated costs.

As the local authority is the lead body any costs it incurs in satisfying its legal requirements under the Act can be recovered under section33 (see VATGPB4000). This includes any costs connected with the social worker, the Chief Education Officer’s nominee and any additional nominee. Of the partners, police authorities can also recover any costs, including those of the Chief Constable, under section33.

This means that the only bodies unable to benefit from section 33 are the health authority and probation committees - although they are able to recover VAT on certain contracted out services under section 41(3) (see VATGPB9340).

There are a number of potential VAT problems with the YOT structure. For example a danger of double claims by the section 33 partners, together with the added complications of the health authority’s and probation committee’s VAT status.

To prevent this HMRC has suggested that YOT committees should appoint the local authority as the claiming body for the purposes of making section 33 claims. Alternatively the police may take on the role.

Staff provided by the partners are outside the scope of VAT as they are supplied to the scheme, rather than to the local authority. Similarly any funds provided by the partners to the scheme are outside the scope contributions. Where this does happen the local authority should ensure that it meets the criteria (see VATGPB4415) to avoid any confusion about whose section 33 tax it is to recover.

Staff secondments from YOTs to the Youth Justice Board are outside the scope of VAT as they are seen to be part of a non-business partnership arrangement.

Other issues

It is important to remember that with loose partnerships the identity of the accountable body does not determine VAT recovery. Although it may receive grant funding as a block the split between the partners has already been decided. The accountable body allocates the money to the partners to spend. VAT recovery depends on the status of the recipient of the supply.

In certain cases local authorities may form joint YOTs. In that event HMRC recommends that one authority takes the lead for section 33 purposes. The other authority making outside the scope contributions. This is not mandatory but may be the option chosen by some authorities.

In certain cases the local authority may pay some of the YOT members provided by the other partners. As long as the local authority makes no additional charge for this it may be treated as acting as a paymaster. The reimbursements are outside the scope of VAT, but if an administration charge is made it is liable to VAT