Commentary

BB/18D/03 VAT—the VAT position of two new PFI arrangements

Part V16 Forms and other HMRC material

BB/18D/03 VAT—the VAT position of two new PFI arrangements

BB/18D/03 VAT—the VAT position of two new PFI arrangements

Business Brief, Issue 18. 30 September 2003

Issue

This Business Brief is intended to clarify the extent to which government departments and NHS bodies can recover the VAT they incur on two new types of PFI (Private Finance Initiative) arrangement, referred to respectively as “Composite Trade” (“Contract Debtor”) and “NHS LIFT”. What follows are general views, and they do not replace the need to look carefully at the circumstances of each case.

Background

Under VATA 1994 s 41(3), government departments and health service bodies are eligible to recover VAT incurred on a range of services purchased in connection with their non-business activities.

The range of services which are eligible for s 41(3) refunds are listed in a Treasury direction published annually in the London, Edinburgh and Belfast Gazettes—the current Direction was published on 10 January 2003, having taken effect from 2 December 2002. It lists 75 different types of services as “Headings”, in respect of which VAT may be recovered.

Headings 45 and 53 are relevant to the “Composite Trade” and “NHS LIFT” PFI arrangements. These state—

Heading

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