Healthcare VAT Specialists

Lease Car VAT Refund Opportunity

by Berthold Bauer on June 24, 2019

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.

The courts found that Northumbria were correct to argue that the 50% block should not apply, because the blocking order applies only to taxpayers who are carrying out  business activities and thanks to the De-supply order, salary sacrifice lease cars are not regarded as a supply of services.  As a result, it was concluded it cannot amount to a ‘business activity’.

In summary, it means that where NHS bodies are supplying lease cars via salary sacrifice and a 50% block has been applied to expenditure on the lease payments (back to 2012), a reclaim for the remaining 50% can be made under the COS rules.  Alternatively, if full output tax and input tax route was taken, a reclaim of the value of full output tax could be made (but this will be subject to the unjust enrichment provisions). 

Berthold BauerLease Car VAT Refund Opportunity

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