HM Revenue & Customs (HMRC) has now published the second ‘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, NHS bodies should ensure that any VAT incurred on such contracts during the 2014/15 financial year is recovered on a VAT return before the 31st July 2015.

On first reading the new guidance, notable points are:


COS Heading 28 – Interpretation and translation services

This covers interpretation of documents. It also includes simultaneous translation services. For example in person, at events/meetings/interviews, via telecommunication media, etc. Furthermore, it includes situations where an interpreter is needed during the course of treatment of an NHS patient, and where sign language services are provided.


COS Heading 40 – Messenger, portering and reception services

This heading covers messenger, portering and reception services. It includes collection and distribution of internal mail by a private company, patient appointment/reminder services, portering services such as the movement of patients and equipment around hospitals; and movement of corpses by funeral directors to or from the hospital site. It excludes the hire of telephone equipment/telephone lines or switchboard equipment alone, and the hire of agency staff to supplement in-house services during peak times or to cover leave.

COS Heading 47 – Passenger transport services

This heading includes:

Taxi firms that supply taxis to staff on request provided the government department or health authority has entered into a contract with the firm and receives a tax invoice, e.g. late night car services;

chauffeur driven cars provided the government department or health authority has entered into a contract with the firm and receives a tax invoice;

services of an outside contractor to transport passengers/patients; and

where a hospital hires or leases a vehicle with a driver for transporting in-patients, outpatients, hospital staff or other individuals (e.g. private specialists/consultants), providing it is in connection with the non-business activity of the provision of NHS health care.

It has also been noted that the hire or lease of a vehicle without a driver would not be covered under this Heading, but may be eligible for a refund under Heading 26.

On the other hand, this heading excludes:

public transport costs (as these are already zero-rated),

road tax,

passenger insurance,

staff members hailing cabs in the street or picking up a taxi from a taxi rank, and

Passenger transport services used for the transport of private patients or for a consultant providing health care to a private patient would not be eligible for a refund as it would be in connection with an exempt business activity and the normal VAT rules would apply


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. We would also expect confirmation of the inclusion of the updated COS Heading 25.

There are other headings yet to be published where HMRC are awaiting guidance from HM Treasury, including COS headings 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.

We’ll keep you updated as soon as further information is available.