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Bid Levy

Does anyone deal with or know about Bid Levy. The Levy is collected by the local council via council tax from local businesses, we then have to invoice the council for the funds + VAT, is this correct?

Answers

  • PhilHallAATPhilHallAAT Registered, Moderator, Staff Posts: 46
    Hi,

    As you probably know, a business improvement district (BID) is a levy (usually between 1%-4% of rateable value) collected by a local authority. There are usually various exemptions - the same as exist for standard business rates - and the levy is only payable for a maximum period of 5 years.

    On the specific issue of VAT, collection of the BID levy by the local authority falls outside the scope of VAT being a statutory levy which is no different to the collection of Business or Non-Domestic Rates. Where a BID company contracts with a local authority to deliver BID services that company is seen to be making supplies to the local authority. The majority of those supplies will be taxable at the standard rate although it is possible that certain exempt and zero-rated supplies might also be made.

    Any VAT charged to the local authority by the BID Company can be recovered under section 33 (see VATGPB4000).

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