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

Although many of the new additions are not immediately applicable to the activities of the NHS (a full list is included for completeness) there is final clarification on under which COS Heading the NHS should recover 111 and similar services.

You may remember that ‘temporarily’ (albeit a distant memory now) it was advised that 111 and similar call centres/contact centres should be recovered under COS Heading 2, this will now need to be amended to ‘COS Heading 78 Call centre and contact centre services’

77. Services, commissioned by the Department for Culture, Media and Sport, of management and maintenance of the Royal Parks and of other lands provided for as part of that commission.

78. Call centre and contact centre services

79. Services provided by International Trade Advisors to the Department for International Trade.

80. Services of fire prevention and rescue services provided to the Ministry of Defence.

81. Services of secondment of staff accredited by the Government Commercial Development Centre from the Government Commercial Organisation.

82. Goods and services supplied to High Speed Two (HS2) Limited which are necessary for the purpose of the development and delivery of the HS2 high speed railway network.

Further detail can be found here

You will find that the online HMRC Internal Manual VATGPB9700 has not yet been updated to reflect these additions, however you should be mindful of these changes and amend any accounting procedures for any affected supplies.

This new release is an important reminder, that HM Treasury will consider applications for further COS Headings should a detailed business case accompany any such request. Therefore, whilst a broader reform may be on the horizon, it is important that where there may be a general consensus that the direction would benefit from a new/amended COS Heading, this is submitted at the earliest opportunity.

On a final note, should you have any questions at all, please do not hesitate to contact your lead consultant to discuss any opportunities for further VAT recovery.