News alert / Trust wins VAT reclaim review

11 October 2023

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The Tax Centre of Excellence (TCOE) has issued a summary of the Royal Surrey NHS Foundation Trust v HM Revenue and Customs case along with suggested action trusts might take. The case relates to the purchase of equipment by the trust through NHS Supply Chain. After the goods were ordered, but before they were supplied, the trust decided that the equipment would be purchased by its wholly owned subsidiary. This would then provide fully managed healthcare services to the trust using the equipment. As the subsidiary would be using the equipment for business activities, the trust sought to reclaim the input tax on the purchase of the equipment. With no VAT invoice, this claim relied on the so-called ‘confectionary concession’ that was established to deal with the fact that NHS bodies, and NHS Supply Chain, are part of a single divisional registration and therefore may not have the usual evidence required when reclaiming VAT. This ruling gives clarity around the concession and its wider application to the NHS for any goods bought from NHS Supply Chain for a business purpose. The TCOE suggests that trusts that have been refused use of the concession may wish to revisit the decisions taken by HMRC and investigate the submission of claims for the related input tax where appropriate. (Access to the TCOE is free for NHS staff with an NHS email address. To sign up to the site, select NHS England as the employer as not all NHS bodies are listed in the dropdown.)