Value Added Tax Act 1994 section 41A

Supply of goods or services by public bodies

Section 41A determines when supplies of goods or services made by public authorities acting in their public capacity must be treated as business supplies for VAT purposes.

• When a public authority supplies goods or services in its capacity as a public authority, special rules determine whether VAT applies to those supplies.
• Supplies relating to a specified list of activities — including telecommunications, utilities, transport, warehousing, and trade fairs — are automatically treated as business supplies subject to VAT, unless the scale of the supply is so small as to be negligible.
• For supplies that do not fall within the specified list of activities, they are only treated as business supplies if failing to charge VAT on them would lead to a significant distortion of competition.
• The competition distortion test acts as a safeguard to ensure that public authorities do not gain an unfair advantage over private sector competitors by not charging VAT on comparable supplies.