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Conditions for VAT recovery

Where VAT is incurred by a s 33 body that is directly attributable to a non-business activity, it may be recovered in full, provided that VAT has been charged correctly and the required evidence is obtained in the form of a valid VAT invoice or receipt. It is worth noting, however, that HMRC do have discretion to accept alternative evidence.

The full requirements are that, generally, the local authority must:

1. Ìý

   •ÌýÌýÌýÌý place the order

2. Ìý

   •ÌýÌýÌýÌý receive the supply

3. Ìý

   •ÌýÌýÌýÌý receive a tax invoice addressed to the local authority, and

4. Ìý

   •ÌýÌýÌýÌý pay from the local authority's own funds (including funds awarded to it, such as lottery funds)

There are blocking orders on certain types of supply, meaning that VAT cannot be recovered. For example VAT cannot be recovered on the purchase of motor cars if it is expected that there will be any private use of the car. For more detail see V3.443. Mayoral cars are different