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NHS Trusts: VAT Status

Volume 635: debated on Tuesday 6 February 2018

9. If he will hold discussions with the Chancellor of the Exchequer on the VAT status of NHS trusts. (903781)

I am grateful for that reply, although I suggest it ought to be reconsidered. NHS trusts desperate to avoid financial difficulties appear to have found a new magic money tree: setting up wholly owned subsidiaries to avoid paying substantial amounts of tax to the Treasury. Rather than encouraging this tax dodging and further fragmenting the NHS, why do the Secretary of State and his friend the Chancellor not either ban this practice or agree to let them all have the VAT exemptions?

The Department wrote to all NHS and foundation trusts in September 2017 to remind them that tax avoidance schemes should not be entered into in any circumstances, but the hon. Lady makes a slightly strange point. She seems to be arguing that NHS hospitals are, in essence, paying too much tax to the Treasury, rather than having that money within the NHS. These subsidiaries are 100% owned by trusts themselves.

The Government have already legislated for but not implemented a proposal to introduce a £95,000 limit on exit payments for public servants in the NHS. Would it not be sensible, in the meantime, to charge NHS trusts VAT on any exit payments in excess of £95,000 to deter this waste of public resources?

I admire how the VAT element of the original question was brought into a discussion of exit payments. As my hon. Friend will be well aware, I visited the issue of exit payments frequently as a member of the Public Accounts Committee, and I am happy to discuss it further with him.