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V6.306 Local authorities and similar bodies—liability of supplies

Local authorities may treat certain activities as 'non-business', provided that both of the following are satisfied:

1. Ìý

   •ÌýÌýÌýÌý they engage in the activities as public authorities

2. Ìý

   •ÌýÌýÌýÌý non-business treatment would not lead to significant distortion of competition

Case law has confirmed that public bodies engage as public authorities when they undertake their duties under a legal regime which applies to them and not to other bodies (a 'special legal regime'). HMRC's interpretation of the terms 'bodies governed by public law' and 'special legal regime', which is set out in Revenue and Customs Brief 27/08 dated 19 May 2008, is based on the decisions in Edinburgh Telford College [2006] STC 1291 (CS) and Riverside Housing Association [2006] STC 2072 (Ch). In HMRC's view the policy informed by these decisions has been confirmed by the subsequent outcomes of The Chancellors, Masters and Scholars of the University of Cambridge VTD 20610 and Wakefield College [2011] UKUT 495 (TCC).

To qualify