My understanding is that the supply of services made by a Local Authority under a statutory obligation and not in competition with the private sector should be treated as non-business for VAT purposes, for example Environmental Health undertaking ‘works in default’ due to enforcement action, would be outside the scope of VAT.
In some cases we get agreement from the owner or occupier to carry out works and then recharge them. This is most common in cases of hoarding or filthy and verminous premises for instance, where the occupier is unable to handle the situation and in the interests of their public health we organise works. However, strictly speaking the works are not carried out in default of statutory notices, but instead are by agreement. Should we be charging VAT in these circumstances?
Other examples of recharges are public health funerals. We have a duty under legislation to undertake a funeral, where no one else is dealing with it. In some cases, we find there is an estate for us to make a claim against, so we are able to recover the costs incurred. Would VAT be non-business in these circumstances? (As a result of our statutory obligation).
In addition, Officer time can form part of the costs incurred. If we charge officer time for a statutory function, should NO VAT be charged? If we charge Officer time for works done/costs incurred by mutual agreement, should VAT then be charged?
In terms of non- business VAT and recharging costs, would there be any difference between a statutory power and a statutory duty?