Merging of Police and Fire Services in Scotland likely to lose estimated £30m of Input VAT

The proposed Scottish national Police and Fire Services will no-longer be eligible for refunds of Input VAT on their UK VAT returns which, is estimated to block an estimated £30 million next year.

A letter from Treasury minister David Gauke MP to the Unison union appears to support the Scottish Government’s own worst-case scenario that merging the forces will end their VAT exemption.

The changes, through the Police and Fire Reform Bill, are still under discussion by the Scottish and UK governments.

But Mr. Gauke wrote: “Based on the information available, it seems that neither the new police authority nor the fire and rescue service will be eligible for VAT refunds.”

He said consistent eligibility criteria must be maintained, adding: “The decision to reform the police and fire services in such a way as to make them ineligible against these long-standing criteria has been made by the Scottish Government.”