Value Added Tax Act 1994, section 41

Application to the Crown

Part III Application of Act in particular cases

(1)This Act shall apply in relation to taxable supplies by the Crown as it applies in relation to taxable supplies by taxable persons.

F316(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)F317,F318,F319Where VAT is chargeable on the supply of goods or services to a Government department ... or on the importation of any goods by a Government department ... and the supply ... or importation is not for the purpose—

(a)of any business carried on by the department, or

(b)of a supply by the department which, by virtue of [F320section 41A,F320] is treated as a supply in the course or furtherance of a business,

then, if and to the extent that the Treasury so direct and subject to subsection (4) below, the Commissioners shall, on a claim made by the department at such time and in such form and manner as the Commissioners may determine, refund to it the amount of the VAT so chargeable.

(4)F321The Commissioners may make the refunding of any amount due under subsection (3) above conditional upon compliance by the claimant with requirements with respect to the keeping, preservation and production of records relating to the supply... or importation in question.

(5)For the purposes of this section goods or services obtained by one Government department from another Government department shall be treated, if and to the extent that the Treasury so direct, as supplied by that other department and similarly as regards goods or services obtained by or from the Crown Estate Commissioners.

(6) F325 In this section “Government department” includes [F322 the Scottish Administration F322][F323 , the [F324 Welsh Assembly Government F324] , F323] a Northern Ireland department, a Northern Ireland health and social services body, any body of persons exercising functions on behalf of a Minister of the Crown, including ... any part of a Government department (as defined in the foregoing) designated for the purposes of this subsection by a direction of the Treasury.

(7)For the purposes of subsection (6) [F326each of the following is to be regarded as a body of persons exercising functions on behalf of a Minister of the CrownF326][F327 —

(a)F327] [F328 a health service body as defined in section 60(7) of the National Health Service and Community Care Act 1990,

[F329 (b)F329] M11 a National Health Service trust established under Part I of that ActF328] or the National Health Service (Scotland) Act 1978[F330 ,

(c)F330] [F331 an NHS foundation trustF331][[F332,F333 ,

(d)F333] a Primary Care TrustF332][[F334,F335 ,

(e)F335] a Local Health BoardF334][[F336,F337 ,

(f)F337] [F338 an integrated care board,F338]

F339(g). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[[F340,F341 (h)F341] NHS EnglandF340] [F342 ,

(i)F342] the National Institute for Health and Care ExcellenceF336][F343 ,

F344(j). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F345 (k)F345] the Health Research Authority (also established by that Act),F343]

[F346 (l)a strategic highways company appointed under section 1 of the Infrastructure Act 2015.F346]

(8) In subsection (6) “a Northern Ireland health and social services body” means—

(a)M12a health and social services body as defined in Article 7(6) of the Health and Personal Social Services (Northern Ireland) Order 1991; and

(b)a Health and Social Services trust established under that Order.

Definitions used in section 41 7

taxable supply

“taxable supply” has the meaning given by section 4(2);

Defined in s.96(1) · see it in the full Act
taxable person

“taxable person” means a person who is a taxable person under section 3;

Defined in s.96(1) · see it in the full Act
VAT

“VAT” means value added tax charged in accordance with this Act;

Defined in s.96(1) · see it in the full Act
business

(1) In this Act “business” includes any trade, profession or vocation.

Defined in s.94(1) · see it in the full Act
the Commissioners

“the Commissioners” means the Commissioners of Customs and Excise;

Defined in s.96(1) · see it in the full Act
supplied

(3) In sub-paragraph (2), “supplied” is to be construed in accordance with Part 1 of the Electricity Act 1989 (see section 64(1) of that Act ).

Defined in Sch.7A para.A1 · see it in the full Act

(3) In sub-paragraph (2), “supplied” is to be construed in accordance with Part 1 of the Electricity Act 1989 (see section 64(1) of that Act ).

Defined in Sch.8 para.3 · see it in the full Act
company

(2B) In sub-paragraph (2A) “company” and “control” have the same meaning as in section 839 of the Taxes Act.

Defined in Sch.10 para.34(2B) · see it in the full Act

Cases considering section 41 4

Revenue And Customs v Northumbria Healthcare NHS Foundation Trust

[2020] EWCA Civ 874 · 10 July 2020Interprets

Section 41(3) provides the domestic statutory basis for refunding VAT charged on acquisitions by a qualifying public body where the acquisition is not for the purpose of a business carried on by it. The court held that the cars acquired for the employee scheme were not acquired for such a business purpose and therefore qualified for refund. (see paras [7]-[9]; [15]; [39]-[43]) Section 41(3)(a) was interpreted as excluding a refund only where the relevant supply or acquisition was for the purpose of a business carried on by the public body. Because the relevant car activity was not an economic activity, the statutory condition was satisfied. (see paras [15]; [18]; [23]-[24]; [39]-[43]) Section 41(6) was used to establish that the Trust counted as a government department for the purposes of the refund scheme. (see para [8]) Section 41(7) was cited with section 41(6) as part of the basis for treating the Trust as a government department under the refund scheme. (see para [8])

Midlands Partnership University NHS Foundation Trust, R (on the application of) v The Commissioners for HMRC

[2024] UKUT 334 (TCC) · 25 October 2024Interprets

Applies the statutory COS VAT refund regime and treats “non-business” as a supply not made for the purpose of a business carried on by the public body. The claim depended on satisfying that condition. Identifies the condition for refund of VAT charged on supplies to a government department: the supply must not be for the purpose of a business carried on by that department. The Tribunal used the provision as the statutory context for the Article 2 and Article 9 analysis (see paras [5]-[7]).

Mainpay Limited v The Commissioners for His Majesty’s Revenue and Customs

[2022] EWCA Civ 1620 · 9 December 2022Limits

The court noted that Treasury contracting-out arrangements under this provision can permit public bodies to recover input VAT, although they would not resolve VAT sticking at an earlier stage between Mainpay and the agency. (see para [85])

What each judgment says about section 41 is in the case-law panel in the full Act.

Amendments and notes

34 notes from legislation.gov.uk

Amendments

  1. F316S. 41(2) omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), s. 198(2)(a)
  2. F317Words in s. 41(3) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 44(2)(a) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  3. F318Words in s. 41(3) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 44(2)(b) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  4. F319Word in s. 41(3) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 44(2)(c) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  5. F320Words in s. 41(3)(b) substituted (17.7.2012) by Finance Act 2012 (c. 14), s. 198(2)(b)
  6. F321Word in s. 41(4) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 44(3) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  7. F325Words in s. 41(6) omitted (8.2.2000) by virtue of S.I. 2000/90, art. 3(1), Sch. 1 para. 29(a) (with art. 2(5))
  8. F322Words in s. 41(6) inserted (6.5.1999) by 1998 c. 46, s. 125, Sch. 8 para. 30 (with s. 126(3)); S.I. 1998/3178, art. 2(2), Sch. 3
  9. F323Words in s. 41(6) inserted (1.4.1999) by 1998 c. 38, s. 125, Sch. 12 para. 35 (with ss. 139(2), 143(2)); S.I. 1999/782, art. 2
  10. F324Words in s. 41(6) substituted by Government of Wales Act 2006 (c. 32), ss. 160, 163, Sch. 10 para. 39 (with Sch. 11 para. 22), the amending provision coming into force immediately after "the 2007 election" (held on 3.5.2007) subject to s. 161(1)(4)(5) of the amending Act, which provides for certain provisions to come into force for specified purposes immediately after the end of "the initial period" (which ended with the day of the first appointment of a First Minister on 25.5.2007) - see ss. 46, 161(4)(5) of the amending Act. text substituted for certain specified purposes only, see the commentary. Note: in some cases two versions of the measure may be present: the original version and substituted version.
  11. F326Words in s. 41(7) inserted (1.4.2015) by Finance Act 2015 (c. 11), s. 67(1)(a)(2)
  12. F327Word in s. 41(7) substituted (17.7.2014) by Finance Act 2014 (c. 26), s. 107(2)(a)
  13. F328Words in s. 41(7) substituted (8.2.2000) by S.I. 2000/90, art. 3(1), Sch. 1 para. 29(b) (with art. 2(5))
  14. F329Word in s. 41(7) substituted (17.7.2014) by Finance Act 2014 (c. 26), s. 107(2)(b)
  15. F330Word in s. 41(7) inserted (17.7.2014) by Finance Act 2014 (c. 26), s. 107(2)(c)
  16. F331Words in s. 41(7) inserted (1.4.2004) by Health and Social Care (Community Health and Standards) Act 2003 (c. 43), ss. 33(3), 199(1), (4); S.I. 2004/759, art. 2
  17. F332Words in s. 41(7) inserted (1.4.2000 (E.W.) otherwise 11.5.2001) by 1999 c. 8, s. 65, Sch. 4 para. 86; S.I. 1999/2342, art. 2(4)(b)(iii); S.I. 2001/1985, art. 2(4)
  18. F333Word in s. 41(7) substituted (17.7.2014) by Finance Act 2014 (c. 26), s. 107(2)(d)
  19. F334Words in s. 41(7) inserted (10.10.2002 for W., 1.3.2007 in so far as not already in force, immediately before the National Health Service Act 2006 comes into force) by National Health Service Reform and Health Care Professions Act 2002 (c. 17), s. 42(3), Sch. 5 para. 40; S.I. 2002/2532, art. 2, Sch.; S.I. 2006/1407, art. 1(1), Sch. 1 para. 12 (with art. 4)
  20. F335Word in s. 41(7) substituted (17.7.2014) by Finance Act 2014 (c. 26), s. 107(2)(e)
  21. F336Words in s. 41(7) inserted (retrospective to 1.4.2013) by Finance Act 2013 (c. 29), s. 191(1)(2)
  22. F337Word in s. 41(7) substituted (17.7.2014) by Finance Act 2014 (c. 26), s. 107(2)(f)
  23. F338S. 41(7)(f) substituted (1.7.2022) by Health and Care Act 2022 (c. 31), s. 186(6), Sch. 4 para. 41; S.I. 2022/734, reg. 2(a), Sch. (with regs. 13, 29, 30)
  24. F339S. 41(7)(g) omitted (1.2.2023) by virtue of The Health and Social Care Information Centre (Transfer of Functions, Abolition and Transitional Provisions) Regulations 2023 (S.I. 2023/98), reg. 1(2), Sch. para. 7 (with reg. 3)
  25. F340Words in s. 41 substituted (1.7.2022) by Health and Care Act 2022 (c. 31), s. 186(6), Sch. 1 para. 1(1)(2); S.I. 2022/734, reg. 2(a), Sch. (with regs. 13, 29, 30)
  26. F341Word in s. 41(7) inserted (17.7.2014) by Finance Act 2014 (c. 26), s. 107(2)(h)
  27. F342Word in s. 41(7) substituted (17.7.2014) by Finance Act 2014 (c. 26), s. 107(2)(i)
  28. F343Words in s. 41(7) inserted (17.7.2014) by Finance Act 2014 (c. 26), s. 107(1)
  29. F344S. 41(7)(j) omitted (1.4.2023) by virtue of The Health Education England (Transfer of Functions, Abolition and Transitional Provisions) Regulations 2023 (S.I. 2023/368), reg. 1(2), Sch. 1 para. 6 (with reg. 7)
  30. F345Word in s. 41(7) inserted (17.7.2014) by Finance Act 2014 (c. 26), s. 107(2)(k)(l)
  31. F346S. 41(7)(l) substituted for words (1.4.2015) by Finance Act 2015 (c. 11), s. 67(1)(c)(2)

Modifications

  1. C35S. 41 modified (2.12.1999) by S.I. 1999/3145, art. 8; S.I. 1999/3208, art. 2

Marginal citations

  1. M111978 c. 29.
  2. M12S.I.1991/194.