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:

• Heading 14
  – Support of off the shelf software is not eligible for recovery; even where separately contracted/ negotiated.
  – Hosting services are eligible (where supplied as part of a fully managed IT infrastructure)

• Heading 25
  – HMRC confirmed in June last year that MFDs (multi-functional devices) were eligible for recovery. They were approached by HFMA on 21^st May 2013 about this – so where a Trust stopped claiming VAT on these between these two dates, COS recovery can be backdated (as far back as 21.5.13)

• Heading 26
  – The requirement for a vehicle to be hired for more than 30 days to qualify has been removed.  The essential requirement is that the vehicle hire must include repair and maintenance in their contract.

• Heading 41
  – Trusts will need to demonstrate the date/timeframe ODP role changed to nursing service primarily in order to make backdated (i.e. out of year) claim and hold evidence for public bodies group to check if required.

• Accounting for VAT
  – HMRC have confirmed that where a supplier does not charge VAT on a supply, and subsequently they issue the Trust with a VAT only invoice – VAT can be recovered in the COS period in which the VAT only invoice was received.
  – HMRC have further confirmed that the 4 year cap will apply for adjustments where an incorrect ruling was given to an NHS Trust (or via circulated/networking means – i.e. Government departments centre of excellence).

If you have any queries relating to the recent COS guidance  – please don’t hesitate to contact a Consultant on our Free VAT Helpline.