HM Revenue & Customs (HMRC) has now published the first ‘wave’ of the revised single book of COS VAT guidance for Government departments and NHS bodies, following the review of interpretation of the rules. This has gone live on GOV.UK.

The external link which takes you directly to the Contracted Out Services guidance is or to access via GOV.UK go to the Revenue & Customs page > VAT > scroll down to VAT manuals > select ‘get manuals from the HMRC website > select ‘G’ > Government and public bodies > VATGPB9000 > VATGPB9700.

Although there seem to be some changes to the interpretation of several headings, HMRC has stressed that there are no policy changes, which means the guidance is simply a statement of the current rules as they stand.

There is therefore no set date from which the rules apply, so NHS bodies can apply these rules retrospectively for the current (2014/15) year.

On first reading the new guidance, notable points are:

Heading 1 – Accounting, Invoicing and Related Services

This includes general record keeping, invoicing and preparation of tax returns and other related supplies and preparation of financial accounts and/or statements and accountancy advice. However, tax planning advice is specifically excluded.

This heading therefore seems to allow general tax compliance work which is used to complement in-house tax return preparation, but not specific advice.  Reference is also made to the Treasury rules and NHS guidance which dissuades the use of tax avoidance schemes.

Heading 7 – Broadcast Monitoring Services

This now includes social media monitoring, for example Facebook postings, Twitter feeds, etc.

Heading 10 – Catering

This includes hire of agency staff relating to catering.  It also includes vending machines when supplied as part of a catering contract.

Heading 65 – Training, Tuition or Education

This has now been clarified to include on-line training.  Although most NHS bodies have claimed this VAT to-date, it is encouraging to see the guidance updated to take account of developments in technology.

We understand from HMRC that there are still several headings where technical discussions are still taking place with the policy team and other experts, including definitions within COS headings 14 and 31.

There are other headings yet to be published where HMRC are awaiting guidance from HM Treasury, including COS headings 25 (relating to photocopiers/multi-function equipment), 45 and 52.  These last two are likely to be the very last to be published.

Until the revised guidance is published, HMRC has stressed that previous guidance can still be relied upon.

All in all, there are likely to be four ‘waves’ of publication according to HMRC. We’ll keep you updated as soon as further information is available.