Case Studies

The following case studies represent a small selection of the VAT advisory and review projects completed recently where we have ‘added value’ to our NHS clients.  We have also provided the fee basis of each of these to enable you to understand the different fee options available.

Case study 1 – example of specific work done an acute NHS Trust after winning the contract – contingent fees

CRS VAT Consulting started working for a Trust in January 2010, following appointment under the collaborative framework contract.

We conducted a re-review of the first nine months of 2009/10 financial year of contracted-out services VAT (i.e. April to December) and identified a further VAT recovery of £105,542.35 which had been missed by the previous advisers.  The previous firm had identified £106,891.81 of VAT in this period, so our re-review resulted in a 99% increase.

We also completed a business and partial exemption review for the 2009/10 financial year.  Again, the previous firm had identified VAT recovery of £59,748.72 for months 1 to 9, we identified a total VAT refund of £205,660.59 for the year as a whole.

Case study 2 - example of consultancy work – zero-rated catering/cold take-away food – contingent fees

We have conducted many reviews of Trust catering income in order to identify a percentage of takings which can be zero-rated for VAT purposes. 

This involves liaising with catering managers to determine the level of sales records kept, i.e. whether they itemize takings by types of meals, etc, also whether they have till systems where the till staff can differentiate the types of meals/food sold.

These reviews have resulted in retrospective refunds and subsequent future VAT savings.

Case study 3 - other ‘secondary’ VAT reviews – contingent fees

By reviewing the exact time periods and types of VAT as our main competitor, we produce substantial additional results.

The following table represents just eight of the latest COS VAT re-reviews which we have completed for the first nine months of 2009/10 (April to December) where the previous adviser had already carried out their VAT review.

On average, we have identified £140,000 more VAT recovery than the previous adviser.

Case study 4 - example of consultancy work – zero-rated construction – hourly fee rate

We gained agreement from HMRC on behalf of an NHS Trust to treat a new building for patients as a 'relevant residential' building rather than a 'hospital building', therefore zero-rated, resulting in a VAT saving in excess of £270,000.

This was following a detailed review of the relevant legislation and case law, the specific patient groups and care activities, staffing arrangements and details of the NHS 'continuing care criteria' for elderly/mental health patients and negotiations with HMRC’s policy unit.

The Trust had previously been told at a VAT conference run by one of our competitors that VAT savings of this kind were not possible.

Case study 5 - example of consultancy work – advice on the purchase of a building to be converted from residential use to NHS healthcare use – hourly fee rate

We recently advised a mental health Trust on the VAT implications of purchasing a building for £6.8m which had been constructed in the last four years for residential purposes and was being purchased by the Trust for conversion to a mental healthcare unit.

The vendor of the property had previously achieved zero-rating VAT relief on the construction of the property for residential use and had asked the Trust to sign a contract confirming that the Trust would continue to use it for this purpose.

Because of the ‘clawback’ rules on the change of use of a building within ten years of its construction, the Trust would have been liable to a potential VAT charge exceeding £700K had it not sought our advice to alter the clauses in the contract, putting the onus on any VAT charge onto the vendor.

Case study 6 - example of consultancy work – land transactions – hourly fee rate

We were asked to advise a Primary Care Trust on the VAT treatment of a land sale to a local authority.  The contracts drawn up by the various sets of solicitors could have resulted in an unnecessary VAT cost the the PCT if not worded carefully.

We advised the PCT of the correct contractual clauses to ensure that neither party incurred any unnecessary costs.  Our advice involved the PCT ‘opting to tax’, which also resulted in the PCT being able to recover additional input tax in excess of £50,000 on some associated costs, which would otherwise had been non-recoverable.

Case study 7 - demolition contract – contingent fees

We reviewed a demolition procure 21 capital scheme for an acute Trust.  The Trust had utilised the services of the ‘free’ procure 21 VAT service and were advised that there would be no scope for VAT recovery.  Our work resulted in VAT recovery in excess of £207,000.

Case study 8 - Fleming/Conde Nast VAT claims – contingent fees

We have submitted retrospective claims (Conde Nast/Fleming) for periods up to 1996 and 1997.

We know of at least two examples where the value of the Fleming claim submitted by us was several times higher in value than ‘prospective’ claims being suggested to our clients by some of our competitors.

In one such example, a client Trust had been persuaded by another firm of VAT advisers to let them ‘have a look’ at the Fleming VAT claim opportunity, to see what they could come up with compared to CRS VAT Consulting.  The other VAT adviser suggested that they could submit a claim to HMRC on behalf of the Trust totalling £800K.  The claim calculated by CRS VAT Consulting including statutory interest came to £4.8M.