Value Added Tax Act 1994, section 41A

Supply of goods or services by public bodies

Part III Application of Act in particular cases

(1)This section applies where goods or services are supplied by a [F348 public authorityF348] in the course of activities or transactions in which it is engaged as a public authority.

[F349 (2)Unless the supply is on such a small scale as to be negligible, it is to be treated for the purposes of this Act as a supply in the course or furtherance of a business if it is in respect of any of the following activities—

(a)telecommunications services,

(b)supply of water, gas, electricity or thermal energy,

(c)transport of goods,

(d)port or airport services,

(e)passenger transport,

(f)supply of new goods manufactured for sale,

(g)engaging in transactions in respect of agricultural products in the exercise of regulatory functions,

(h)organisation of trade fairs or exhibitions,

(i)warehousing,

(j)activities of commercial publicity bodies,

(k)activities of travel agents,

(l)running of staff shops, cooperatives, industrial canteens, or similar institutions, or

(m)activities carried out by radio and television bodies which are of a commercial nature.F349]

(3)If the supply is not in respect of such an activity, it is to be treated for the purposes of this Act as a supply in the course or furtherance of a business if (and only if) not charging VAT on the supply would lead to a significant distortion of competition.

F350(4)F347] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Definitions used in section 41A 3

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
business

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

Defined in s.94(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

Cases considering section 41A 6

Northumbria Healthcare NHS Foundation Trust v Commissioners for His Majesty’s Revenue and Customs

[2025] UKSC 37 · 29 October 2025Interprets

The provision domestically implemented article 13. For an unlisted activity, a public body’s supply falls outside business treatment only where it acts as a public authority and non-taxation would not significantly distort competition (see paras [38]; [46]). The subsection confines the domestic public-body regime to supplies made in activities or transactions in which the body is engaged as a public authority. The Trust did not satisfy that condition when supplying parking (see paras [38]; [89]-[90]). The subsection treats Annex I activities as business supplies unless conducted on a negligible scale. Car parking was not an Annex I activity (see paras [38]; [40]). For an activity outside Annex I, the subsection treats the supply as made in the course or furtherance of business if non-taxation would significantly distort competition. Hospital parking satisfied that condition because the likely distortion was more than negligible (see paras [38]; [129]-[133]).

Northumbria Healthcare NHS Foundation Trust v The Commissioners for HMRC

[2024] EWCA Civ 177 · 27 February 2024

The provision implemented Article 13(1) for domestic VAT purposes. For the relevant period, its business-supply test was treated as corresponding to the public-authority taxable-person issue. (see paras [28]-[34]) The court applied the requirement that VAT is chargeable where non-taxation would lead to significant distortions of competition. It held that the required factual and economic assessment had not been established. (see paras [32]-[34]; [136]-[157])

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

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

Confirms that the domestic treatment of supplies by a public authority reflects Article 13 of the Principal VAT Directive, subject to the significant-distortion exception. The Tribunal applied the corresponding Article 13 test (see paras [10], [92]-[97]).

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

Amendments and notes

4 notes from legislation.gov.uk

Amendments

  1. F347S. 41A inserted (17.7.2012) by Finance Act 2012 (c. 14), s. 198(3)
  2. F348Words in s. 41A(1) substituted (31.12.2020) by Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 45(2) (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. F349S. 41A(2) substituted (31.12.2020) by Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 45(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.
  4. F350S. 41A(4) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 45(4) (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.