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HFMA VAT Technical Sub-Committee Minutes – September 2015

by Berthold Bauer on December 8, 2015

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.

There was also discussion around the ongoing confusion concerning Heading 52: Professional Services.  It was confirmed that there are separate guidance notes for government departments and the NHS, and that HMRC are working on an internal briefing document to help in determining the split between advisory and implementation work.

Partial Exemption Framework

It was discussed that some Trusts were having difficulty in implementing the Framework, with a particular issue surrounding the wording.  HMRC confirmed that their Policy department is currently reviewing the wording.

Contracted Out Services Tax Point Rules

The committee asked HMRC if the rules had to be strictly applied to each VAT return, or if an adjustment could be made on a yearly basis.  It was noted that the letter sent out by HMRC on this subject allowed for an annual adjustment in the 2015/16 financial year, but the committee asked if this could be applied going forward.  John Welsh of HMRC noted the issues raised and made clear that he expected the rules set out in the letter and linked guidance should be applied by the NHS.

Cost improvement programmes

The HFMA are working on an article regarding VAT recovery on cost improvement programmes.  There is concern that NHS Trusts are being given incorrect advice by companies selling these supplies and may be claiming VAT in error, believing the contracts to be eligible managed service contracts.  We recommend that NHS Trusts obtain VAT advice from a specialist like Berthold Bauer before entering into these arrangements.

Lease Cars update

John Welsh confirmed that this issue is still being considered by the Policy Team, and that he is waiting for their response.

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