Independent VAT Consultant
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VAT: Don’t forget the manuals

15th Apr 2019
Independent VAT Consultant
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electronic manuals

Neil Warren thinks that tax advisers should make more use of HMRC’s manuals to solve VAT problems and not just rely on the VAT public notices.

What is your strategy for dealing with a VAT question asked by a client?

Let us imagine the following situation: a client telephones you and asks about the VAT liability of providing a transport service to a hospital, which involves using his vehicle to take people from their private homes to their local hospital for treatment. He understands the fees he charges the hospital will be exempt from VAT, but wants to be sure this is correct.

Stage 1: The law

The starting point is to review the legislation, particularly Schedule 9 of VATA 1994, which comprises all of the different groups of goods and services that are exempt from VAT. A good start to our query: Item 11 of Group 7 (Health and welfare) confirms exemption applies for: “the supply of transport services for sick or injured persons in vehicles specially designed for that purpose.”

Stage 2: Public notices

Our imaginary client is encouraged by the above reference but is unsure about the meaning of the phrase ‘specially designed’ as far as his vehicle is concerned. He also wonders if a person who is in good health but has preventative treatment for a condition is classed as a ‘sick or injured person’.

The relevant public notice reference on this part of the legislation is VAT Notice 701/31, headed “Health institutions supplies,” specifically para 2.7. This is the next important point: always be clear that the public notices mainly provide HMRC’s interpretation to the legislation, although some sections (not many) do have legal force. This interpretation takes into account the results of past tribunal cases. To quote directly from para 2.7:

2.7 Transport supplied or received by a qualifying institution

Transport services are exempt when the:

  • transport is an integral part of the exempt supply of care and treatment provided by a qualifying institution
  • transportation, by any provider, of sick or injured persons to or from a place of medical care or treatment, in a vehicle specially designed or adapted for the purpose.

The problem here is that the notice has not given any additional information that would help address our client’s two concerns. The second bullet point is mainly repeating the words in the legislation. We need another source of information.

Stage 3: HMRC VAT manuals

The VAT manuals are used by HMRC officers to deal with challenges in their day-to-day work. I have encountered situations where officers refuse to accept information in the public notices, instead preferring to quote and utilise the VAT manuals.

It is fortunate that these manuals are now available for us to access as a public record (this was not always the case), so we should take advantage of them where possible.

The good news is that the HMRC VAT manual on “VAT Health” has a very helpful policy note at VATHLT5030. This gives further detail about what HMRC considers to be a ‘specially designed’ vehicle, including detail about ramps and secure clamps for wheelchair users. The manual also defines ‘sick or injured persons’ very clearly as ‘persons in need of or having just received medical care or treatment.’

Search engine

You may wonder how I found the above references so easily. The secret is to go to your favourite search engine (Google, Bing, DuckDuckGo etc) and clearly enter “HMRC VAT manual” followed by the relevant topic eg “HMRC VAT manual transport services hospital patients.”

I have just done this and it not only alerts me to VATHLT5030, which I quoted above, but also VATHLT5040, which gives details of when the exemption does not apply, eg hospital services provided by a taxi firm would not qualify for exemption because taxis are not ‘specially designed’ vehicles.


You will notice that in my three-stage analysis above, I have not suggested either telephoning HMRC’s helpline service or writing to HMRC in Southend for a clearance letter.

Putting aside the practical problems of getting to speak to someone at HMRC, my view is that a written audit trail to support a VAT outcome, such as the above analysis, gives much more legal certainty. With a telephone call issues could get confused with the interpretation of words, local accents or the use of jargon by the officer.

So as a final tip, don’t forget to copy and file the relevant HMRC information you use to solve a VAT dilemma, in case there is a query on a future compliance visit.

Replies (4)

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By Les Howard
16th Apr 2019 08:41

Excellent article.
I make frequent use of the Manuals. I don't always agree with them, of course! But they are an essential resource for anyone trying to find their way through the vat maze.

Thanks (2)
By Ian McTernan CTA
24th Apr 2019 12:43

My solution in any case where I am not absolutely certain is to make use of the VAT specialist I have connections with- who then charges me for the advice and I pass the fee on to the client without a mark up. Clear written guidance and on his PI!

That way we know we have it right. I'm not a VAT expert and relying on me to find the right answer in these manuals where there are exceptions to exceptions to exceptions or spending time trying to come up with an answer that may be right isn't worth it.

My advice is if you're not an expert in a field ask those who are- don't try and be a jack of all trades.

Oh and one other thing: HMRC manuals are not the law. They are HMRC's interpretation of it.

Thanks (2)
Replying to Ian McTernan CTA:
By moneymanager
24th Apr 2019 14:16

"interpretation of it", which of course is equally true of the court system right to the top.

Thanks (0)
By tadek
05th Jan 2020 06:10

Neil, have just read your article about VAT and whilst the first search, "HMRC VAT manual", takes me to the HMRC web page however, "HMRC VAT manual transport services hospital patients", takes me to a page that begins, "HMRC services: sign in or register" !!!!.

Thanks (0)