PFI Expiry: Managing VAT and Partial Exemption Risks at Asset Handback for Local Authorities

• PFI contract expiries may leave local authorities with assets in poor condition, requiring significant spending on repairs or upgrades.
• This situation poses not only legal and estates challenges but also significant VAT and partial exemption risks.
• The future use of the asset affects VAT recovery; if used for exempt or non-business activities, authorities may face unexpected VAT costs.
• Local authorities should plan early for PFI expiry, considering both maintenance and VAT implications to avoid budget pressures.
• VAT and partial exemption analysis should be integrated into early exit planning, not left until the end.

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.

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