A number of points of interest to report from last month’s HFMA meeting:

1. Finalised guidance for the application of Contracted Out Services to the NHS is now not expected until 2015 (a muted delay as a result of the impending general election).
2. The ongoing discussions over Heading 52 remain, with Treasury now seeking a greater understanding of how the NHS have used this heading in the past.
3. HMRC have confirmed that Heading 14 ‘Computer Services’ is currently being rewritten; although (as with all muted amendments) the intention is not to change policy but to update the manner in which it is applied.
4. Of more concern is an inferred retrospective claw back on VAT reclaimed under Heading 69. As you will be aware the opportunities for VAT reclaim relating to agency staff – and in particular heading 69 ‘Typing, secretarial, telephonist & clerical services’ – have been largely withdrawn and there have been a flood of requests from HMRC relating to recovery of this nature made in the 13/14 FY. Customs have confirmed that the question of retrospective claw back is still awaiting legal opinion.
5. HMRC have reaffirmed that any deviation from the Standard NHS VAT Recovery method (Business Activities & Partial Exemption) must be cleared first – all trusts should by now have received this in writing.
6. Procedures for error correction and when to use VAT 652 forms is still under discussion.

What to do next:

By now all NHS Trusts should have halted reclaim under Heading 69 – bar genuine outsourced telephony & clerical services (a typing pool company or off-site telephone answering service for example).

Where mistaken recovery has continued, Berthold Bauer clients have been advised where these occurred and have made corrections where necessary.

Please ensure that all key staff are aware that agency staff will only be recoverable where they fit Heading 41 ‘Nursing Services’ – i.e. nurses only.

Rather than opinion on the unfairness of retrospective claw back; we will keep you informed as the facts of the matter develop.

To discuss this or indeed any other matter please do not hesitate to contact us – either via your Consultant directly or our Free NHS Helpline 0800 328 9254.