According to the Practical Vat Loose Leaf Service, the Vat Act was changed to make it easier for municipalities to administer Vat. But for municipalities, Vat is still a complex issue.
This is because of the unique nature of their activities and their relationship with government on the one hand and with businesses and customers on the other.
While Vat for municipalities may be complex, ignorance of the law is no excuse. Especially when dealing with water boards from a Vat perspective.
Are you a municipality? Here's how to get the Vat treatment of water boards right
So what exactly is a water board?
A water board is involved in water management and supplies bulk drinkable water to various municipalities.
Here are the three features of water boards:
Basically, a water board isn't part of a municipality. A municipality will buy bulk water from the water board and pay Vat on it.
This means sales of water to municipalites are subject to Vat at the 14% standard rate. Grants from Government for water boards will also be subject to Vat at the 14% standard rate.
It's that simple. Knowing how to treat Vat when water boards are involved will help ensure your municipality complies with the Vat Act.