VATLP23950 | Option to tax - anti-avoidance test: what is the meaning of 'eligible purposes'?: what about occupation by government departments and local authorities?

Occupation of a building by a body to which VATA 94 section 33 applies (such as a local authority) is deemed to be for eligible purposes to the extent that occupation is for non-business purposes. Occupation by a government department (within the meaning of section 41) is always deemed to be for eligible purposes.

Further guidance regarding section 33 bodies can be found in Notice 749 Local authorities and similar bodies.