Just before I retain a VAT specialist I thought I would try to at least understand enough to phrase my question correctly. So here goes.
A client is providing services to the public sector (Network rail) on what he believes is a VAT exempt basis. Another client of ours is providing very similar services to the NHS and is charging VAT. The latter is what I believed the situation to be. Unless you are involved in the provision of hands on medicine the service is non-statutory and therefor VATable (and even then there are arguments around the Rapid Sequence case that make this shaky ground).
The Network Rail client's main advantage over the usual Freelancer seems to be that the fees retained by the agency are VATable and the rest isnt.
The questions, therefore, are; under what circumstances or to which public bodies are supplies of a service to a public body non VATable? Does it relate to the statotory responsability and definition of business and non-business? So if I am laying tracks for Network Rail, fixing patients for the NHS or providing content for the BBC this is their core business and therefore the service is non-VATable?