As a result of the recent decision of the Upper Tribunal in the case of Northumbria Healthcare NHS Foundation Trust, there is an opportunity for any NHS bodies that were accounting for VAT by using the 50% input tax block, to reclaim this ‘blocked’ input tax.
Whilst there does not appear to have been an official announcement by them, HMRC have helpfully updated the guidance on COS Heading 14 Computer Services and COS Heading 71 Welfare Services on the online manual late last week. Whilst Heading 71 hasn’t provided much in the way of difficulties over the years, Heading 14 has certainly been an area of uncertainty for many.
HMRC have today released further clarification to be read in conjunction with the October 2015 ‘HMRC COS Guidance for government departments and NHS bodies (2nd tranche)’ document. There are not many surprises in this document, and below is a summary of the key points:
HFMA have released minutes from their September VAT Technical Sub-Committee meeting. Please find below a summary of the key points.
Contracted Out Services Guidance
The minutes confirmed that the latest HMRC guidance was released on 12 October 2015, and HMRC stated in the meeting that telephony (including VOIP) is not included within Heading 14: Computer Services.
As you may be aware – earlier this month HMRC released the final tranche of COS headings (though more guidance is expected to be released on Heading 52 at a later date). Unfortunately, it was not immediately explicit as to the period for which this guidance applies.
The VAT government and public bodies manual (VATGPB) is currently in the process of being transferred from the HMRC website to GOV.UK and while this is happening it is not possible to publish any further amendments. In the interim you may treat this document as the current guidance for these Headings.
In this document you will also see that we have made some changes to the first tranche of guidance published in March 2015 (pages 14-17) to take into account comments made to us after the guidance was published.
HMRC recently published guidance on COS and included clarification on when VAT can be recovered. This confirmed that VAT should be recovered within the financial year in which it became chargeable (subject to a three month adjustment period). VAT is incurred when it became chargeable, or where you do not have a VAT invoice, the date you receive a VAT invoice.