Northumbria Healthcare NHS Foundation Trust v The Commissioners for HMRC
[2024] EWCA Civ 177
Midlands Partnership University NHS Foundation Trust, R (on the application of) v The Commissioners for HMRC
25 October 2024
[2024] UKUT 334 (TCC)
Upper Tribunal
An NHS trust provided free health services to local authorities, funded by the government. The court ruled the trust had to pay VAT because it received money for the services, even though it wasn't aiming to make a profit and the services were free to patients. The court found that the laws governing the trust didn't differ significantly from laws affecting private companies doing similar work.
Key Facts
- •Midlands Partnership University NHS Foundation Trust (the Trust) sought a refund of Contracted Out Services (COS) VAT.
- •The Trust provided free health services (health visiting, sexual health, infection prevention and control) to local authorities.
- •HMRC argued the services were exempt or standard-rated supplies, not outside the scope of VAT.
- •The Trust claimed its supplies were "non-business" (not for consideration or economic activity) or that it wasn't a taxable person under Article 13 PVD.
- •The claim involved historic VAT of £800,693 and potentially £2.5 million in subsequent supplies.
Legal Principles
A supply is "for consideration" if there's a legal relationship with reciprocal performance.
Article 2 PVD, Tolsma v Inspecteur der Omzetbelasting Leeuwarden (Case C-16/93)
Economic activity requires a supply made for obtaining income on a continuing basis; a wide-ranging, fact-sensitive enquiry.
Article 9 PVD, Wakefield College v HMRC [2018] EWCA Civ 952
Public bodies governed by public law are not taxable persons for activities done "as public authorities" under a special legal regime; activities done under the same conditions as private operators are taxable.
Article 13 PVD, Comune di Carpaneto Piacentino and others (Case C-129/88), Northumbria Healthcare NHS Foundation Trust v HMRC [2024] EWCA 177
When assessing VAT consequences, characterize relationships by reference to contracts unless vitiated by facts.
Secret Hotels2 Ltd v Revenue and Customs Commissioners [2014] UKSC 16, Airtours Holidays Transport Ltd v Revenue and Customs Commissioners [2016] UKSC 21
Outcomes
The Trust's claim was dismissed.
The court found the services were "for consideration" under Article 2 PVD because the contracts showed a reciprocal obligation for services and payment. The services also constituted "economic activity" under Article 9 PVD as they were provided for obtaining income, despite public funding and the non-profit nature of the Trust. Finally, the Trust wasn't acting "as a public authority" under a special legal regime for Article 13 PVD purposes.
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