Technical / Technical review - June

NHS productivity fell by 24% between 2019/20 and 2020/21, according to a research paper by the Centre for Health Economics at the University of York. The fall was due to a substantial decrease in outputs – 16% – and an increase in inputs of 10%. The authors warn of the challenges in measuring productivity in the NHS, especially in the pandemic. ‘Although this does reflect a genuine reduction in the number of patients seen and treated during 2020/21 due to the pandemic, it does not mean that the NHS has produced less health than in previous years,’ they say. 

Revenue and Customs has issued guidance for NHS trusts on how residential accommodation on hospital sites can sometimes qualify for the reduced rate of VAT (5%) on gas and electricity. In general, hospitals are not considered residential accommodation and should attract VAT on fuel and power at the standard rate. But care homes, hospices or staff accommodation blocks – if separate, self-contained buildings – could qualify for the reduced rate. The guidance explains the criteria that must be met for this to be the case.

NHS bodies and local authorities have had legal powers and duties to work together for many years. This is enabled by different pieces of legislation including section 75 of the Health Service Act 2006, section 113 of the Local Government Act 1972, and section 71 of the Health and Care Act 2022. In terms of VAT, local authorities and NHS bodies fall under different parts of the VAT Act 1994. This means that it is important to understand that the VAT implications of joint working arrangements need to be considered at an early stage when entering into joint working arrangements. This briefing from the HFMA highlights issues for consideration including three specific areas where VAT is currently a financial barrier to efficient joint working. Areas considered include: employment issues; local authority partial exemption; and contracting arrangements.

Patient-level cost (PLICS) dashboards from the 2021/22 national cost collection went live in the middle of May. There are five new or updated PLICS dashboards available via the Future NHS costing workspace: integrated portal for acute and community services; mental health and improving access to psychological therapies portal; ambulance portal; national data quality tool; and a self-service tool. The new self service tool is open to all stakeholders and allows users to create their own dashboard using the data fields available in the PLICS dataset. It currently contains data for the acute sector. Access to the self service portal is by request.

Revenue and Customs has issued a factsheet on dealing with the over-collection of taxes under the off-payroll working rules. Where a public sector body incorrectly determines that a worker falls outside of the off-payroll working rules, there can be an over-collection of taxes. If an error is made then the public sector body is liable for the full amount of income tax and national insurance that should have been collected had the correct determination been made. The worker, and their personal service company, may have paid corporation tax, income tax and national insurance on payments received for the engagement. In the case of an incorrect determination, these taxes may be repayable and HMRC has a process for this to happen. The factsheet sets out the information that public sector bodies should keep so that they have the details that HMRC needs to make a repayment.