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HMRC internal manual

VAT Government and Public Bodies

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HM Revenue & Customs
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Government departments and health authorities: VAT law: EU law

Government Departments and health authorities, in common with section 33(3) bodies (see VATGPB4000), are bodies governed by public law (see VATGPB2000). As a result they are covered by the same EU law. This means that under Article 13 of the Principal VAT Directive (see VATGPB2100) they are treated as non-taxable persons when they engage in activities as public authorities.

In situations where non-taxable treatment of activities would result in a significant distortion of competition they are treated as carried on by way of business (see VATGPB9330). Similarly non-taxable treatment is not available for those activities undertaken which are included in Annex 1 to the Principal VAT Directive (see VATGPB3400).