Another bit of good news for the NHS – the Court of Appeal has recently supported the Upper Tribunal’s previous decision that lease cars provided under a salary sacrifice are not a supply for VAT purposes (as a result of the ‘de-supply’ order – “Value Added Tax (Treatment of Transactions) Order 1992 SI 1992/630”).
As a result, it is hoped that HMRC will accept the position and revise their guidance, meaning that NHS Trusts will not be required to account for output tax on supplies made to its employees under a salary sacrifice agreement. Additionally, as these supplies are not considered ‘business’ supplies for VAT purposes, the entitlement to recover VAT on the costs incurred will exist under the Contracted Out Service provisions.
We will follow up work with our Clients in relation to protective and retrospective claims for overpaid/under-claimed VAT, and support our Clients in adjusting their processes going forward. If your organisation requires assistance on this matter, please don’t hesitate to contact us here.