Sector VAT Issues
Local authorities remain complex organisations from the VAT perspective due to the special VAT regime within which they operate under Section 33, VATA 94. The sector faces continuing pressures as economic strategies across the UK look toward Regional Approaches and “Powerhouses” alongside city regeneration projects and Business Improvement District initiatives. Centurion has been heavily engaged in supporting both councils and the new charitable trust bodies taking over the delivery of leisure and cultural services in the community. A clear example of VAT getting complicated and where VAT expert advice is important.
Currently the repercussions of the Ealing Borough Council case on the option now available for councils, who retain their leisure services provision in house, to apply the VAT exemption is creating opportunities for some councils.
The benefit of applying the VAT exemption retrospectively - has to be tempered by the requirement to be consistent in its application to leisure revenue in future where councils have major capital plans for their leisure centres this can result in breaches in the de-minimis input tax calculations and the potential loss of VAT recovery.
How Centurion help
With joined up communication key in a large organisation we ensure that, through our VAT Management Program meetings a member of the Estates Team attends to identify the projects where VAT issues need to be addressed in advance of any contractual undertakings. This approach has produced real compliance benefits from the early identification of VAT issues.
The current interest in local authorities to invest in projects e.g. Retail Parks, Industrial Estates, Solar farms to deliver revenue is another area where VAT planning at an early stage is important.
The increasing collaboration across authorities and with bodies such as charities and housing associations, particularly on social care provision, is often an area where Centurion assist.
The local authority sector has developed quite a sophisticated VAT awareness over the years particularly through the engagement of CIPFA and direct communication from the CIPFA VAT Committee with HMRC. Centurion’s VAT support role has expanded as the sector increasingly recognises the financial costs which can arise from poor compliance and HMRC show no “light touch” in their application of penalties to a public sector body.
National Procurement Framework for VAT Services to the Public Sector
Centurion VAT are registered on this current framework and public sector bodies from councils, government bodies and the not-for profit sector has access to this framework.