Decision Reference Number: WPCC4-0046
Lead Officer: Sara Ansell
Chief Officer approval: N/A
Date: 12/02/2025
Publication: Information in this form is subject to the Freedom of Information Act 2000 (FOI Act) and other legislation. Unless the information provided is covered by an exemption and stated to be either confidential or partly confidential, the information contained in the form will be published on the OPCC website.
Status: Non-confidential
If partially-confidential or confidential please detail the FOI exemption applied and specify which parts are confidential:
Decision summary:
To approve an application to be made to HMRC for the option to tax for both Justice Centres located at Leamington and Nuneaton.
I confirm that my register of interests declaration is up to date and that none of my interests preclude me from making this decision.
Signature: P.Seccombe
Date: 18/02/2025
Supporting information
1. Background information: why do we need to make this decision?
Historically, the PCC has been recovering VAT on supplies made to the Justice Centres as a section 31 body in compliance with the partial exemption calculation rules. This position has been reviewed more recently and independent tax advice has been sought from BDO regarding the matter.
As a result of the advice received, HMRC have confirmed that no option to tax has been previously lodged for either of the Justice Centres in Leamington or Nuneaton. The partner contributions towards the running costs of the Justice Centres have correctly been treated as “exempt income”, that is, no VAT was charged to the partners.
However, given significant capital investment and planned maintenance at both Justice Centres from 2025/26 onwards, the partial exemption calculation 5% limit is likely to be breached. This would effectively mean that the PCC would be non-compliant, and VAT could not be recovered on any supplies related to exempt activities. This would result in higher supply costs, and all partner contributions would consequently have to increase to meet these.
The PCC’s Chief Finance Officer reported the issue of Justice Centre VAT at the Justice Centre Board meeting in December 2024, and followed this with a more detailed meeting, following the emergence of further updated information at a meeting with finance officers representing partners in early February 2025. The position was explained in some detail at the meeting, and no specific concerns regarding the planned approach were raised.
BDO will work with the PCC and Warwickshire Police to prepare the option to tax submission. Once the application has been complete, VAT can continue to be recovered on supplies and partner contributions will be invoiced including VAT from 2025/26 onwards.
2. What additional documents are relied upon? Please provide a link or separate attachments.
Finance officers meeting record
3. What benefits will this bring, including financial, social or environmental benefits?
Tax advice has been received which recommends that options to tax be submitted to HMRC as soon as possible, but by 1 April 2025 at the latest, for Leamington and Nuneaton Justice Centres. This will ensure that the partial exemption VAT rules are not breached, and VAT can continue to be recovered on Justice Centre supplies.
4. What is the impact of not approving the application?
If the application is not approved and an option to tax is not submitted to HMRC the PCC risks breaching the partial exemption VAT rules, meaning that VAT could not be recovered on supplies relating to exempt activities.
5. How much will it cost? (please provide cost breakdown, including any identified savings, and include where they have been approved)
There is no direct cost associated with making an option to tax application. BDO who are independent tax experts will assist with the application.
6. Who has been consulted on this proposal?
PCC, DPCC, OPCC managers, Chief Constable, Deputy Chief Constable, Justice Centre partners, and their finance representatives.
7. Will this decision have an impact on any specific individuals or groups or communities?
The decision will have implications for each of the Justice Centre partners, as VAT will become chargeable on partner contributions. partners and their finance representatives have been consulted and on this and no specific concerns have been raised.
8. Does this decision have legal implications? Has legal advice been sought?
The option to tax application will need to be made in accordance with HMRC requirements, and any relevant tax laws. Expert tax advisors are being used to assist with the application to ensure that it is undertaken in a compliant and correct manner.
Comments from the Chief Finance Officer
The option to tax has been recommended by our tax advisors to ensure the PCC remains compliant with VAT rules and can continue to reclaim VAT on supplies. All partners have been consulted and no specific concerns have been raised. Partner contributions from 2025/26 onwards will be invoiced and VAT charged.
Comments from the Chief Executive and Monitoring Officer
It is important to keep tax arrangements under review to ensure that we are acting within financial regulations and guidelines.
