- VAT Agency Approach can secure savings for Local Authorities
- UK courts ruled Local Authorities operate leisure centers under statutory duty, making services non-business
- Local Authority sports services will be VAT-free and should have been all along
- Significant VAT liability change for local authorities in over 50 years
- Non-business supplies allow Local Authorities to recover VAT on related costs
- Outsourcing to third parties previously protected VAT recovery but now limits benefits of court decision
- Opportunity to review operating model for more VAT-efficient approach
- Outsourcing often resulted in VAT-exempt supplies, costing local authorities
- Court decision allows restructuring to improve VAT position for authorities, contractors, and users
- Leisure Agency Model changes operator’s status from principal to agent
- Aims to deliver savings for contractors, reducing Council costs or increasing surplus share
- Many councils have adopted the agency model with PSTAX support
- Some leisure centers have moved from deficit to surplus due to improved VAT recovery position
Source: pstax.co.uk
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
