A ‘Memorandum of Understanding’ relating to joint staff of universities and NHS organisations has been agreed with The Department of Health, NHS Employers and the Universities and Colleges Employers Association in response to the University of Glasgow – v- HM Revenue and Customs VAT tribunal ruling.

In the University of Glasgow case released in April 2005, the VAT Tribunal concluded that there was a supply of staff from the university to the NHS which was subject to VAT. Furthermore, this VAT was not eligible for recovery by the NHS under the contracted-out services rules.

The purpose of this new memorandum is to set out the NHS and university understanding of the role of joint staff of NHS organisations and universities who are engaged in both teaching and/or research as well as the delivery of patient care.

HMRC have agreed that provided the parties operate within the context of the practices described in the Memorandum, such arrangements will be outside the scope of VAT.