CRS VAT provides advisory support for our NHS clients in a number of scenarios.
VAT planning and advice
VAT avoidance by NHS bodies is rightly frowned upon by the relevant authorities including HMRC, HM Treasury and the DoE. There have been various letters and memos sent to the NHS over the years warning NHS bodies not to enter into arrangements or transactions where the sole or main purpose is to achieve a VAT saving.
However, with all NHS bodies compelled to find cost savings, there has understandably been a drive to legally reduce VAT costs by ensuring that the best tax consequences of a transaction are identified and utilised.
Before contracts are drawn up, it is worth considering what the VAT implications may be and whether you should seek advice. Very often, legitimate VAT savings can be achieved by making small changes in the way an NHS body procures certain goods and services.
As well as the ‘core’ NHS VAT recovery and review services (e.g. contracted-out services reviews), CRS VAT has the expertise to provide VAT planning advice and invests the time to help unlock additional VAT savings for our NHS clients. We offer reviews of high value service/supply contracts to ensure that these are as VAT efficient as possible and recovery is maximised.
We do not advocate confrontational policies or contrived transactions which can be viewed as VAT avoidance. However, we equally do not believe it appropriate to take the approach that results in the greatest payment of VAT unnecessarily. NHS bodies are able to structure purchases in the most efficient way using basic VAT principles accepted by HMRC in order to benefit from VAT recovery or relief that is properly due.
Examples of VAT planning services recently provided to NHS clients include:
o Outsourced pharmacy arrangements
o Review and advice on managed service contracts – what works, what doesn’t
o Review and advice on supply contracts
o IT procurement
o Property transactions
o Energy VAT savings
o Cold take-away catering
o PFI contract reviews
o Use of charitable or donated funds
With NHS bodies entering into high value contracts, a level of assurance is often required to ensure that the VAT is treated correctly. Many NHS bodies and some VAT advisers incorrectly believe that HMRC no longer provides assurance or approval of the VAT treatment of a contract or transaction. However, a non-statutory clearance is a facility whereby HMRC is obliged to give an answer on a point of legal uncertainty that is not clearly covered in the guidance.
HMRC has produced a non-statutory clearance check list, so failure to deal accurately with the points listed may invalidate the clearance. This means a non-statutory clearance request requires a considerable amount of work, care and knowledge of VAT law and the nuances of HMRC guidance in order for it to be successful.
CRS VAT has the expertise to conduct clearance requests for the NHS. We use our knowledge and experience to ensure that key issues are addressed and information is correctly provided in a way that improves the likelihood that you will receive the answer required.
HMRC enquiries and dispute resolution
HMRC sometimes gives incorrect rulings when conducting compliance reviews. CRS VAT has the experience to deal with such issues as they arise.
This would include considering the various options available including:
Seeking a reconsideration – If it appears that HMRC’s view on a matter is questionable or incorrect then in the first instance we suggest a reconsideration of the matter is requested. Provided the strict time limits are adhered to, HMRC is obliged to provide a statutory reconsideration of the decision by an independent officer not previously involved in the matter.
CRS VAT has considerable experienced in drafting reconsideration requests and our knowledge of the rules means we are often able to point HMRC to alternative, more favourable, interpretations.
Formal appeals to the Tax Tribunal – If a reconsideration request is not successful, NHS bodies may have the right to appeal the decision to a Tax Tribunal. CRS VAT can assist by advising or acting as an agent in this otherwise daunting process.
Being a firm of Chartered Tax Advisers means that we are able to directly appoint professional tax barristers to represent our clients in such appeals. We have close relationships with several barristers familiar with the relevant tax law. We work with our contacts and assist in preparing statements of case etc., in order to keep costs to a minimum.