Skip to main content

NHS Trusts: VAT

Volume 455: debated on Wednesday 10 January 2007

To ask the Chancellor of the Exchequer when he will make a statement on the VAT treatment of the supply of academic staff by universities to NHS trusts. (113661)

HM Revenue and Customs (HMRC) are currently discussing the impact of a VAT and duties tribunal decision on the supply of clinical academics by universities to NHS trusts with the Department of Health, university representative bodies, and other interested parties. HMRC will issue full guidance on the VAT position in due course.

To ask the Chancellor of the Exchequer what consultation took place with (a) NHS trusts and (b) their representatives before HM Revenue and Customs published guidelines in April 2006 directing that NHS trusts should not be recovering VAT incurred in providing doctors and locums under Professional Services Heading 52. (113662)

The present Treasury direction—issued under section 41 (3) of the Value Added Tax Act 1994—authorises Government Departments and the NHS to recover VAT incurred on nursing services (heading 41), which includes the hire of nurses from outside the NHS. Neither that heading, nor heading 52, extends to the hiring in of other medical staff. Guidance from HM Revenue and Customs in April 2006 simply clarified the correct VAT position. As such, no consultation was required or took place on this matter.

Section 41 (3) does not refund all the VAT that NHS trusts incur on the items they purchase. The overarching principle is that—in common with the public sector in general—irrecoverable VAT incurred by NHS trusts is included in the overall funding of the NHS.