The Treasury is consulting
until 19 November 2020 on potential reforms to the VAT refund rules for public
sector bodies. This is a consultation on VATA 1994 s 41 which covers government
departments, the devolved administrations, the NHS and Highways England –
rather than the slightly wider provision for refunds to various local
authorities, the emergency services, BBC and other specified public bodies in s
33 in respect of goods and services used for the purposes of a non-business
activity.
The consultation document notes that s 41 ‘in its current form
is unduly complex, administratively burdensome and a barrier to effective financial
planning’ and that the Treasury is ‘proposing to extend the scope of section 41
to permit full refunds of the VAT incurred on all goods and services during the
course of non-business activities for those organisations currently falling
within the scope of section 41 – this is the Full Refund Model’.
The Treasury also invites views on the timescale for
implementation of the full refund model, with potential benefits of early
reform balanced against the need to minimise disruption for public bodies including
the NHS, given the coronavirus and other pressures. The document suggests this
may take two to three years, with ‘time built into the schedule to evaluate
implementation’.
The Treasury is consulting
until 19 November 2020 on potential reforms to the VAT refund rules for public
sector bodies. This is a consultation on VATA 1994 s 41 which covers government
departments, the devolved administrations, the NHS and Highways England –
rather than the slightly wider provision for refunds to various local
authorities, the emergency services, BBC and other specified public bodies in s
33 in respect of goods and services used for the purposes of a non-business
activity.
The consultation document notes that s 41 ‘in its current form
is unduly complex, administratively burdensome and a barrier to effective financial
planning’ and that the Treasury is ‘proposing to extend the scope of section 41
to permit full refunds of the VAT incurred on all goods and services during the
course of non-business activities for those organisations currently falling
within the scope of section 41 – this is the Full Refund Model’.
The Treasury also invites views on the timescale for
implementation of the full refund model, with potential benefits of early
reform balanced against the need to minimise disruption for public bodies including
the NHS, given the coronavirus and other pressures. The document suggests this
may take two to three years, with ‘time built into the schedule to evaluate
implementation’.
