VAT bill for Scottish Police Services Authority
Efficiency savings in doubt as new agency does not benefit from police board exemption
The new Scottish Police Services Authority (SPSA) is facing a heavy VAT bill after a failure to realise the agency would not be exempt from VAT in the same way police forces are, the Herald reports today.
According to the article, the Treasury has written to the Scottish Government explaining that the SPSA, which was set up to centralise purchasing for Scotland's eight police forces in order to make efficiency savings, will need to pay 17.5% VAT on all purchases. This could amount to around £5 million each year.
Under section 33 of the 1994 VAT Act, local authorities do not pay VAT on most purchases, and this extends to police boards, but non-departmental public bodies such as the SPSA do not enjoy the same exemption.
The SPSA, which became fully operational in April, was set up under the Police, Public Order and Criminal Justice (Scotland) Act 2006, passed during the last parliamentary session. Talks with HM Revenue and Customs are said to be ongoing.
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