Merged forces set to lose £30m VAT exemption

THE new national police and fire services will not be eligible for VAT refunds estimated to cost more than £30 million a year, according to the UK government.

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.

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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.”

A Scottish Government spokeswoman said: “We have costed our outline business cases responsibly, assuming the worst-case scenario that VAT would have to be paid.”