Autumn Budget 2017: VAT - Refunds to combined authorities, fire and rescue authorities

The Government will implement legislation to bring combined authorities, fire and rescue authorities in line with the ability of local authorities to recover the VAT incurred on purchases made to support their statutory obligations.
This legislation affects combined authorities, fire and rescue authorities (which are a function of police and crime commissioners), the London Fire Commissioner, the Scottish Fire and Rescue Service, and the Scottish Police Authority. 

This new legislation would be operational from the date that the Finance Bill 2017-18 receives Royal Assent.

Since 1973, local authorities and other specified bodies have been able to recover the VAT they incur in carrying out their statutory obligations under what is now section 33 of the VAT Act 1994.

In general, a combined authority is established by the Secretary of State through the combining of two or more authorities in an area consisting of two or more local government areas in England. This allows a combined authority to assume responsibility for economic development, regeneration and transport across the combined area. The definition of local authority in section 33 does not include combined authorities, meaning they are currently unable to benefit from VAT recovery under section 33 without the creation of an individual Statutory Instrument each time a combined authority is established.

By implementing this new legislation, combined authorities, fire and rescue authorities, the London Fire Commissioner, the Scottish Fire and Rescue Service, and the Scottish Police Authority will become eligible to recover VAT under section 33 of VAT Act 1994 in much the same way as local authorities. It is not expected that this change in legislation will have any impact on charities and other civil society organisations.

Further information on the impact of the Budget can be found here.
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