VAT treatment of Criminal
Records Bureau (CRB) fees and recharges thereof.
I refer to our earlier correspondence. As we have both noted,
some confusion has arisen as to the correct VAT status of
fees charged for CRB checks carried out via local authorities
acting as 'Umbrella Bodies' for individuals who have required
CRB checks to be made on their behalf. I hope that the following
clarifies the position. We have written to CIPFA in similar
terms, and you may, if necessary, refer to or copy this letter
to bodies seeking confirmation of the correct VAT treatment.
Background
The CRB is used by employers
and charitable bodies to establish whether their current
or future employees or volunteers, or persons they wish
to contract with, have a criminal record. The CRB will provide
this information on application and for a fee on a "Certificate
of Disclosure". An application for a Certificate of Disclosure has to be
made through bodies that are registered with the CRB. Registered
Bodies include "Umbrella Bodies", which are those
registered with the CRB to countersign applications on behalf
of others that are not registered. Local Authorities will
often act as the Umbrella Body for community and charitable
groups in their area.
The CRB issue two identical certificates; one to the Registered/Umbrella
body, the other to the applicant. What is the liability of the Certificate of Disclosure when
issued by the CRB?
Fees charged by the CRB for the issue of a Certificate of
Disclosure are considered to be statutory in nature, so fall
outside the scope of VAT.
What is the liability of the fees charged by umbrella/registered
bodies?
Recharging the CRB fee
The fee for the
Certificate of Disclosure may be collected on behalf of
the CRB by a Registered or Umbrella Body.
This fee can be treated as a disbursement if all of the
conditions of paragraph 25.1 in Notice 700, are satisfied.
These conditions are:-
- You acted as agent of your client when you paid the third
party;
- Your client actually received and used the goods or services
provided by the third party;
- Your client was responsible for paying the third party;
- Your client authorised you to make the payment on their
behalf;
- Your client knew the goods or services you paid for would
be provided by a third party;
- Your outlay will be separately itemised when you invoice
your client;
- You recover only the exact amount which you paid to the
third party;
The goods or services which you paid for are clearly additional
to the supplies which you make to your client on your own
account.
If the recharge meets these criteria
and is treated as a disbursement it is not liable to VAT.
Making
an administration charge. A body through which an application to the CRB is routed
may raise an administration charge for handling the application.
Such a charge must be separately itemised on the invoice
to the applicant, and will ordinarily be standard rated. When is an administration charge not standard rated?
On occasions local authorities will obtain information from
the CRB for statutory reasons - for example to process an
application for a taxi driver licence. In such situations
any charges raised by the local authority to cover its own
costs are statutory in nature and not subject to VAT.
The reason for this is that of the Local Government (Miscellaneous
Provisions) Act 1976 obliges the local authority to make
these checks [section 59(1)] and empowers them to recover
these amounts from the applicant[section 53(2)].
What
should a Registered/Umbrella Body do if they have charged
VAT in error?
Where local authorities have mistakenly
paid to Customs output tax on the recharge of the CRB fee,
or on statutory administration fees, they are now invited
to submit claims to recover these amounts.
If any local authority has any queries about this issue,
they should, in the first instance, direct them via their
local VAT officer to the Customs and Excise Unit of Expertise
for Public Authorities.
Yours sincerely,
Trevor Wayne.
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