Whilst we eagerly await the outcome of the HM Treasury’s ‘VAT and the Public Sector: Reform to VAT Refund Rules’ paper and consultation, (in which a full-VAT refund model is to be explored) a new Treasury Directive has been released expanding the current Contracted-Out-Services (COS) direction
For a number of years HM Treasury have been considering potential reforms to the Contracted-Out-Services – numbered 1 through to 76 – which you will be familiar with from our reports. As a quick recap these rules [Section 41 VATA94] are the mechanism with which NHS and Government Departments (GD) reclaims VAT on certain outsourced services.
HMRC have updated their guidance today to confirm that all businesses, regardless of annual turnover, will be required to register for Making Tax Digital as of 1st April 2022. This will extend to any businesses which have registered voluntarily for VAT.
Another bit of good news for the NHS – the Court of Appeal has recently supported the Upper Tribunal’s previous decision that lease cars provided under a salary sacrifice are not a supply for VAT purposes (as a result of the ‘de-supply’ order – “Value Added Tax (Treatment of Transactions) Order 1992 SI 1992/630”).
The Chancellor has today announced that the Hospitality and Tourism sectors will benefit from a substantial reduction of the standard rate of VAT from 20% to 5% for a period of six months (Wednesday 15 July 2020 through to Tuesday 12 January 2021).
HMRC announced this week a few further VAT/ import duty reliefs which will support the NHS through this crisis:
when importing certain animals for scientific research, the guidance can be foundhere
when importing certain therapeutic substances like blood-grouping or tissue typing reagents (from plant, animal, other or human origin), the guidance can be found here
when importing certain substances used for non-commercial biological and chemical research, the guidance can be found here
It is hoped that the above reliefs will support the NHS in their research and testing in relation to Covid-19 without VAT and customs duty being an additional barrier. Trusts should be aware that the reliefs exist, as action may need to be taken in order for them to apply.
Please don’t hesitate to contact one of the Berthold Bauer NHS VAT team if you have any questions about the reliefs.
Some more welcome VAT news today, that the VAT on all supplies of Personal Protective Equipment (PPE) will temporarily be zero-rated to reduce the associated cost burden to organisations like the NHS and care homes.