V2.213 Public authorities

This paragraph examines the business status of activities conducted by public authorities.

For an overview of VAT and business more broadly, see V2.201B.

Public authorities—UK legislation

VATA 1994, s 41A provides that where a public authority supplies goods or services in the course of activities or transactions in which it is engaged as a public authority then the supplies will be treated as non-business activities (therefore falling outside the scope of VAT)1.

This is subject to an exception where not charging VAT would lead to a 'significant distortion in competition'2. Where such a distortion would occur, the public authority's supplies will be brought back within the scope of VAT.

The legislation also provides that certain kinds of supply are specifically to be treated as being made in the course or furtherance of business unless the supply is on 'such small scale as to be negligible'3. The kinds of supplies falling within this bracket are as follows:


    •     telecommunications services


    •     supply of water, gas, electricity and thermal energy


    •     transport of goods


    •     port and airport services


    •     passenger transport


    •     supply of new goods manufactured for sale


    •     transactions in respect of agricultural products in the exercise of regulatory functions


    •     organisation of trade fairs and exhibitions


    •     warehousing


    •     activities of commercial publicity bodies


    •     activities of travel agencies


    •     running of staff shops, co-operatives and industrial canteens and similar institutions


    •     activities carried out by radio and television bodies which are of a commercial nature

In addition, where the

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