For several years now Customs have enforced an annual 30 June deadline for VAT recovery on Contracted out services on the basis that Treasury funding for the NHS and other Government departments is designed to take account of VAT paid or recovered on an annual basis. Any deviation from this would therefore in theory distort the Treasury’s figures.

Last year, over 200 NHS bodies’ submitted a VAT return to Customs which included a 2002/03 claim but was received after 30th June 2003. HM Revenue & Customs at first refused to pay these claims however following discussions within Customs and Treasury and also considering representations from Department of Health, it was agreed that those NHS bodies that were informed they had missed the deadline for 2002/03 were permitted to recover the VAT that they were advised to repay.

Customs have now re-iterated that the 30 June deadline for 2003/04 is to be treated as an absolute deadline with no exceptions and they reserve the right to turn down claims for 2003/04 received in Southend after the deadline.