A VAT tribunal decision against HMRC highlights the challenges specialist health providers face in the daily treatment of VAT.
The tribunal decision, which in this instance went against HMRC, will be of particular interest to pregnancy clinics, occupational health, daycare, and patient transport providers, says accountants Hillier Hopkins.
Ruth Corkin, A VAT Director at Hillier Hopkins and member of the VAT Practitioners Group advising Government and HMRC on VAT matters explains.
“The tribunal case was brought by Window to the Womb, a private 4D pregnancy scanning clinic that provides gender and foetal heath scanning together with pictures of unborn children for expecting mums and dads.
“HMRC did not consider Window to the Womb to be a healthcare provider, meaning that it had to charge its customers VAT on the services it provides. Window to the Womb disagreed and took the case to Tribunal.
“The case hinged on whether there was a provision of care by a registered healthcare professional. If so, it would be exempt from VAT. If not, Window to the Womb products would be considered what HMRC calls general supplies with VAT charged at 20%.
“HMRC has long argued that sonographers are not on the list of medical professionals so cannot provide care that is exempt. However, most sonographers are also registered radiographers and sonography is, by its definition, a form of radiography. Window to the Womb and other clinics are also regulated by the Care Quality Commission (CQC).”
The decision has significant implications for all pregnancy scanning clinics and highlights the challenges specialist healthcare service providers face with regards HMRC and VAT, as Ruth explains.
“Patient transport providers, for example, face the difference between VAT being zero-rated and exempt, depending on whether HMRC believes them to be providing passenger or patient transport services. It is complex, as patient transport providers tend to offer both services.
“Occupational health providers, such as those companies made available to their staff, are seen by HMRC as simply providing advice with VAT chargeable. Yet may occupational health specialists are qualified healthcare professionals who offer traditional medical procedures, for example, blood pressure tests. Services should, therefore, be exempt.
“The provision of daycare in nursing and rest homes is often outsourced to specialist providers, yet HMRC considered those providers separate and unrelated to healthcare for VAT. Daycare providers and their customers quite naturally disagree, leading to often protracted discussions and tribunal cases.
“VAT is complex at the best of times. It becomes even more so when there is the provision of specialist care. Specialist care providers should seek support and advice from an accountant that has a deep understanding of the sector and issues at hand.”