Pennine Care NHS Trust – Zero rating for ‘Hospitals & Similar Institutions’

by Berthold Bauer on April 20, 2016


The case concerned the construction of a low secure mental health unit for up to 45 adult males suffering from severe and enduring mental health disorders. All residents are compulsorily detained under the Mental Health Act 1983. The Trust believed it should qualify for zero rating but HMRC contended that it was specifically excluded from the provisions as it was used as a ‘hospital…or similar Institution’ [Note 4, Group 5, Schedule 8 VATA1994]


The Tribunal concluded that the supply was eligible for Zero Rating as its focus was on personal care and the provision of long term accommodation. HMRC’s focus on the high proportion of medically trained staff and diagnosis was not enough to persuade the court that the Unit should be excluded from the zero rating provisions as a ‘hospital…or similar institution’.

What does this mean for your Trust?

This highlights the opportunity for eligibility under the Zero Rate provisions, particularly for NHS Trusts providing Mental Health care where a new building is constructed for the purpose of long term accommodation and personal care. VAT savings and mitigation possibilities should be considered – often these projects are high value due to their very nature and as such the potential VAT saving is significant. In this particular case – the build cost was just over £9.6m +VAT…

If your Trust has any building work projects and you are unsure as to whether there is scope for VAT relief, please speak to one of our NHS / Property VAT experts via our free VAT helpline.

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Berthold BauerPennine Care NHS Trust – Zero rating for ‘Hospitals & Similar Institutions’

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