Scottish Public Finance Manual

If . . .

Then . . .

A GD makes a supply to another GD.

If the supply is a business activity then VAT must be charged

A GD receives a supply from another GD.

If the supply is in support of a business activity then VAT may be recovered. No recovery under the CO Directions will be possible.

If the supply is not in support of a business activity then, if the supply falls within any of the categories specified by the CO Direction, VAT may be recovered.

A GD makes a taxable supply to an NDPB or visa vera

The GD/NDPB must be treated as an ordinary customer and VAT must be charged.

An Executive Agency(EA) makes a taxable supply to a GD.

If the EA forms a part of the same VAT registration as the GD, then no VAT is chargeable.

If the EA is separately registered for VAT then VAT must be charged.

A GD receives a supply from an EA or trading fund.

If the supply is in support of a business activity or CO Directions then VAT may be recovered.

An entire GD becomes a trading fund

It is unlikely that VAT can be refunded via the CO Directions.

Part of a GD becomes an EA or Trading Fund (TF)

For VAT purposes it will remain part of the parent GD unless an application for independent GD VAT registration is made.

Part of a GD becomes an Executive Non Departmental Public Body (NDPB)

A VAT registered NDPB can recover all or a proportion of the VAT incurred on taxable supplies used to support its business activities. VAT incurred in other circumstances is unlikely to be recoverable.

Note: Unless the NDPB is involved in making business supplies it is unlikely to be able to register for VAT, therefore is unable to recover any VAT.

Part of a GD becomes an Advisory Non Departmental Public Body (NDPB)

An Advisory NDPB would be able to recover VAT under COS and business activity as it is funded through and operates as part of a GD.