PROCUREMENT
Historically VAT was always seen as the responsibility of the Finance Department and VAT reclaim was largely a reactive process – using invoices and orders to determine eligibility.
HEALTHCARE SERVICES
NHS
CICs
PRIVATE HEALTHCARE
COSMETIC CLINICS
SUPPLIERS
PROCUREMENT
VAT & FINANCIAL SECTORS
HEALTHCARE
PROPERTY
CHARITIES
EDUCATION
GOVERNMENT
IMPORT & EXPORT
FINANCIAL SAVINGS
CPD TRAINING
The recent amendments to the Contracted Out Services rules, and the subsequent restriction of recovery has meant a pro-active approach is required.
An example would be the nuance on recovery of a contract being viewed as a Single Supply or a Mixed Supply – does this preclude VAT reclaim on maintenance and support?
VAT must become a consideration for the budget holder or Procurement Department when placing orders
- Can the order be structured in a more VAT efficient manner?
- Have I correctly allowed for VAT reclaim – have I correctly allowed for the VAT burden?
Managed Service Contracts (MSC’s) & Managed Equipment Contracts (MES’s)
There is a myth (largely dispensed by suppliers) that MSC’s & MES’s are eligible in full for VAT recovery. Whilst Heading 45 ‘Operation of Hospitals…’ permits VAT recovery on this type of contract it is intended to apply to fully outsourced departments. A supply of equipment thinly wrapped in a service contract is unlikely to suffice.
We then have the unpleasant situation where a Contract is structured as a single supply of services, yet fails the eligibility tests (Note : tests being plural) for being managed – nor by virtue of it being a single supply can the normally eligible maintenance costs be reclaimed.
Avoidable Pitfalls • Common misuse of terminology
- Supply is mixed not single (or composite)
- Goods are seen as separable
- Marketed by Supplier as “VAT Recoverable” – not tested or questioned by Trust
- Lease thinly wrapped in maintenance not sufficient
- The relevant heading is currently under discussion by HMRC and subject to change – risk that changes not communicated to key stakeholders
- Some areas / supplies are specifically ‘blocked’ from VAT reclaim – Boiler-house schemes & CHP
We can work with your Procurement Department to ensure that VAT is forecasted correctly – and where appropriate contracts are truthfully structured to meet HMRC’s hallmark tests.
FREE VAT HELPLINE
You can contact our Free VAT Helpline 24 hours a day using the online form or email help@bbvat.co.uk