Treasury warns NHS trusts over tax avoidance | AccountingWEB

Treasury warns NHS trusts over tax avoidance

A minister has warned hospital trusts about using schemes to avoid paying tax, reports Nick Huber.

Back in June, ITV News revealed that as many as 30 NHS trusts in England were using new forms of short term contracts, on which tax is not payable, rather than using the traditional agency model where locum agencies charge the hospital a fee and VAT on top.

But according to ITV News, the chief secretary to the Treasury, Danny Alexander, has said...


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Avoiding VAT .... by claiming it back

mikewhit | | Permalink

So why can't the hospital just offset VAT paid against other VAT .... or hasn't it kept the receipts ?

Claiming back the VAT ...

BKD | | Permalink

... sounds like a plan, except ...

... what do you think will be the value of taxable supplies attributable to the costs of hiring locum doctors?


Roland195 | | Permalink

I realise this is a gross over-simplification but if the VAT on such services requires to be paid in full and is a best partially recoverable, then presumably the NHS trusts will require more funding from the taxpayer to balance their own budgets which would presumably come at least in part from funds raised from VAT? It gives the Civil Service something to do I suppose.

Another sort of contract perhaps

WhichTyler | | Permalink

To avoid issuing lots of P45's, perhaps a new sort of employment contract could be devised that gives employment status, but without the obligation to provide any fixed hours. It could be called a 'Zero Hours Contract'. 


Can't imagine any problem with that at all.

DMGbus's picture

Healthcare should be zero rated

DMGbus | | Permalink

Healthcare should be zero-rated.

Forget EU rules. (Let's quit if need be).

Let's look at benefiting society in the UK instead.

The health of the nation is paramount.

The cost of healthcare would be less if it were zero rated rather than exempt.   VAT accounting and administration costs would be simplified too.

So, I suggest that VAT avoidance by providors of healthcare is morally excellent - cutting the cost of healthcare is to be applauded.


Healthcare VAT

hilaryc | | Permalink

For the record healthcare is VAT exempt and NHS Trusts cannot normally claim back VAT incurred, other than on certain "contracted out" services. Over time the list of such services allowable has been reduced by Treasury/HMRC and this increases the cost of agency staff.  There are other examples of normal business taxes and penalties increasingly being applied to NHS bodies.  No funding adjustments are done to increase NHS budgets but it seems to help HMRC achieve their targets. An example of mission creep?