HMRC Extends Deferral for Making Tax Digital (MTD): What NHS Finance Teams Need to Know 

HMRC has confirmed that public bodies and NHS Trusts using the GIANT (Government Information and NHS Trusts) VAT return system will not need to migrate to MTD for VAT until at least April 2027. This extends the previous deferral (to April 2026) by a further year and means Trusts should continue filing via GIANT for the time being. While we await HMRC’s formal public guidance, this aligns with earlier HMRC correspondence to GIANT users and sector updates.  

What’s changing (and what isn’t) 

• No MTD for VAT mandation for GIANT users until at least April 2027. Continue filing VAT returns through the existing GIANT process until HMRC instructs otherwise.  

• Digital record-keeping exemption remains in place for now under Regulation 32B (SI 2018/261). This is the statutory basis for exempting certain entities (including public bodies using GIANT) from digital records pending mandation.  

• HMRC has historically written directly to GIANT users to confirm deferrals (to 2025, then 2026). 

HMRC has indicated in previous GIANT letters that it will update bodies ahead of any switchover. You should expect advance notice before you’re required to move off GIANT (typically through letters and HMRC notices).  

Why this matters for NHS Trusts 

• Breathing space for planning and budgets. The extension provides time to plan for MTD alongside ERP upgrades/finance-system changes (e.g., ledger, e-invoicing, data warehouses). 

• Opportunity to align with potential s.41 VAT reform. HMRC/HMT has continued to work on public-sector VAT reforms. Aligning MTD plans with any Section 41 changes may reduce duplicated work.  

• Reduce “cliff-edge” risk. Adopting digital record-keeping disciplines early (even while exempt) lowers transition risk once a definite mandation date is set. HMRC’s core MTD requirements for digital links and functional-compatible software are already outlined in VAT Notice 700/22.  

Recommended next steps (NHS-ready checklist) 

1. Stay on GIANT for VAT submissions. 
2. Gap-assess your digital records. 
3. Map an MTD pathway within your ERP roadmap.
4. Strengthen VAT controls now.  
5. Plan communications.  

How CRSTAX can help 

• MTD-for-VAT Readiness Review (NHS): A targeted review to map your current VAT processes, data flows and digital links, and produce a GIANT→MTD migration plan. 

• ERP & Tax Controls Alignment: We sense-check VAT codes, partial exemption data, and evidence packs so you’re not retrofitting controls under pressure. 

• Section 41 Reform Watch: Briefings on the interaction between Section 41 changes and VAT recovery, plus what that means for MTD sequencing. 

• Training for NHS finance teams: Bite-size sessions on digital links, evidence, and VAT adjustments under MTD. 

What next? 

The extension to April 2027 at the earliest gives NHS bodies welcome time, but it’s not a reason to pause. Trusts that embed digital record-keeping now, tidy VAT controls, and align plans with ERP changes will have a smooth, low-risk transition when HMRC sets the date. 

Need a quick sense-check? Book a 30-minute MTD Readiness Call with our NHS VAT specialists today. 

In a significant judgment today, the UK Supreme Court has ruled in favour of HMRC in its long-running dispute with Northumbria Healthcare NHS Foundation Trust (“Northumbria”) about VAT on hospital car parking charges. This decision upholds HMRC’s position that income from NHS-operated car parks is subject to VAT, with broad financial implications for NHS Trusts across England.

Background

Car parking income generated by NHS Trusts has always been treated as subject to VAT at the standard rate (currently 20%). In February 2024, the Court of Appeal ruled in favour of Northumbria’s position that the income is non-business. It found that parking services provided by NHS Trusts fell outside the scope of VAT because they were supplied under a “special legal regime” and did not distort competition. However, HMRC appealed to the Supreme Court, which has now overturned that decision.

Key Findings

The Court found that while NHS Trusts must follow government guidelines on pricing and concessions, these are flexible recommendations, not legally binding rules. As such, the NHS is not operating under a “special legal system” for the income to be treated as non-business for VAT purposes.

Hospital car parks also compete directly with nearby private ones, as both offer the same basic service, i.e. convenient parking. If the NHS avoided VAT, it could lower prices or keep more profit, giving it an unfair edge, especially when demand far outstrips supply. This real risk of distorting competition means VAT must apply.

What This Means for NHS Trusts

This ruling creates a binding precedent requiring NHS Trusts to continue charging and accounting for VAT on car parking income. Trusts that had paused VAT payments or submitted refund claims based on the earlier Court of Appeal ruling will not recover that VAT and will now need to consider withdrawing or amending their claims.

The judgment means Northumbria’s claim will not be paid. Nor will the claims of around 70 NHS Trusts awaiting this judgment, which amounted to up to £100 million.

Effect on Car Park Construction Costs

The decision affirms that NHS car parking remains a taxable business activity, allowing Trusts to continue recovering VAT costs on construction and operational expenses. For those with substantial investments in car park infrastructure, this mitigates the risk of large VAT adjustments under the Capital Goods Scheme.

Trusts planning new car park developments can proceed with greater clarity, knowing VAT incurred on construction costs should be recoverable. However, they should still carefully assess contractual and operational models, particularly where third-party involvement is contemplated.

Recommended Next Steps

NHS Trusts should now take the following actions following the Supreme Court ruling:

• Ensure VAT is correctly accounted for on car parking income going forward.
• Consider withdrawing or revising any outstanding claims for VAT refunds on past income.
• Review input tax recovery assumptions on car park capital expenditure.
• Evaluate Partial Exemption methods in light of continued business treatment.
• Confirm third-party contracts align with VAT obligations and determine if restructuring is required.

Need Support?

The NHS VAT team at CRSTAX is available to help Trusts assess the implications of this ruling and provide ongoing VAT compliance support.

Read more on Car Parking

Updated: 28 October 2025 (UK).

Executive summary

• In February 2024, the Court of Appeal found that income from an NHS-operated car park is outside the scope of VAT, because the NHS is acting as a public authority under a “special legal regime” (including the NHS 2015 Parking Principles).
• HMRC appealed. The Supreme Court heard the case in April 2025, and judgment is still pending at the time of writing.
• Around 50 NHS Bodies are understood to have claims “stood behind” the Northumbria case, with tens of millions of pounds of VAT potentially recoverable across the NHS. The Court of Appeal’s reasoning concerns NHS-operated car parks only.

While the final position awaits the Supreme Court outcome, NHS Bodies should protect their claims, evidence their “public-authority” framework, and plan for both outcomes to minimise risk and preserve value.

What the dispute is about (in plain English)

The question: Are NHS hospital car-parking charges a taxable supply for VAT, or are they outside the VAT system because the NHS provides parking as a public authority under a special legal regime?

The Court of Appeal’s answer (Feb 2024):

• The provision of hospital parking operated by an NHS trust is sufficiently bound up with the NHS statutory framework (including the 2015 Parking Principles), so the NHS Body is acting as a public authority for this activity and is not a taxable person in that context.
• There is no material distortion of competition from this treatment, given the nature of hospital parking (primarily for patients, visitors and staff) and the limited overlap with commercial car parks.

Scope matters: This decision focused on NHS-operated car parks.  Car parking provided by an outsourced provider or by a PFI company is unaffected, as they are not public authorities.

Current status and why it matters

• Timeline so far: First-tier and Upper Tribunals originally found for HMRC; the Court of Appeal reversed that in February 2024; HMRC appealed to the Supreme Court; the hearing took place in April 2025; judgment is pending.
• Financial exposure/opportunity: Many trusts have lodged “stood-behind” claims. Sector commentary has placed the historic VAT at stake in the tens of millions of pounds, with some trusts facing material cash impacts depending on the final outcome.
• Operational impact: Pricing displays, signage, websites, back-office systems, and communications with patients and staff may all need rapid changes once the final decision lands.

Practical guidance for NHS VAT officers

1) Claims management and deadlines

• Protect time limits now. If your Trust has historically accounted for VAT on car-park income, ensure protective claims (or updates to existing claims) are submitted on time. Late claims risk being out of time.
• Keep claims live and evidenced. Maintain a clear technical narrative, calculations/interest workings, and supporting documents so your claim can be processed quickly once the court position is final.

2) Review how each car park is operated

• NHS-operated sites: Assemble an evidence pack that links operational decisions to the NHS statutory framework and the 2015 Parking Principles (governance, pricing policies, concessions, patient-first considerations, equality and access measures, board minutes, SOPs).

3) VAT accounting and future treatment

• Interim approach: Where the treatment is uncertain pending judgment, document your position, maintain robust reconciliations, and keep system changes scoped so you can pivot quickly.
• Pricing & comms readiness: Prepare two switch plans (NHS wins vs HMRC wins) covering: POS systems, e-commerce, tariff boards/signage, patient and staff communications, and website copy.

4) Wider impact and planning

• Look beyond parking. Map other income streams that may share public-authority characteristics or sit within a special legal regime and assess whether similar arguments might apply—and where competition concerns could differ.
• Consistency of evidence. Create a standard “SLR evidence bundle” across sites: policy documents, concession frameworks, traffic/occupancy data, clinic patterns (e.g., oncology/renal), and local transport context.

Action checklist (this month)

Protect the past

• Catalogue car-park income by site and operating model (NHS-operated vs outsourced).
• Submit or update protective claims with schedules, calculations and interest.

Evidence the “public authority” framework

• Collate the Parking Principles compliance trail (policy approvals, pricing rationale, concessions, patient/staff priority, equality/access considerations).
• Keep meeting notes and decisions that show the statutory and patient-first lens.

Plan for both outcomes

• If HMRC wins: prepare to re-impose VAT swiftly, refresh signage/web copy, re-train cashiers and update POS.
• If the NHS wins: prepare to remove VAT, consider tariff recalibration, and trigger repayment workflows where appropriate.

Align stakeholders

• Brief Finance, E&F, Procurement, Patient Experience and Comms teams. Establish a single source of truth for treatment, evidence, and messaging.

NHS Car-Parking VAT FAQs

Does this apply if our car park is fully outsourced?
Not automatically. The Court of Appeal focused on NHS-operated car parking. Outsourcing, PFI or PPP structures may point to a different supplier, pricing control, and risk profile, which can change the VAT analysis.

Can we stop charging VAT now?
Some Trusts have adjusted in anticipation; others are awaiting the Supreme Court decision. Your decision should balance litigation risk, cash impact, operational change costs, and the strength of your evidence, and it should be documented.

We’ve already filed a claim—what next?
Keep it current and well-evidenced. The best-prepared claims will progress faster once judgment is released.

How CRSTAX can help (NHS-specialist VAT)

Parking VAT Rapid Review (2–3 weeks)

• Site-by-site operating model map, claims triage, and an SLR evidence pack aligned to the Court of Appeal reasoning.

Protective Claims & Calculations

• End-to-end quantification (including interest), technical narrative, and ready-to-file schedules.

Board & Audit Committee Briefing Pack

• A balanced risk/options paper, cash-flow modelling, signage/website changeover plan, and communications templates.

Ready to protect your position before judgment?

1) Rapid Parking VAT Review (free scoping call)

Get a 20-minute triage with our NHS VAT lead: confirm eligibility, map your operating models, and agree next steps. [Button] Book your slot

2) Claims & Evidence Pack Builder

We compile the SLR evidence bundle (Parking Principles, governance, pricing, concessions) and quantify recovery with interest. [Button] Request a proposal

3) Outsourcing/PFI Diagnostics

Not NHS-operated? We’ll analyse contracts, pricing control and supply chains to validate treatment, or design the compliant alternative.

 

Payrolling Benefits Postponed for a Year

After listening to feedback, the government has delayed the introduction of mandatory payrolling benefits and taxable employment expenses until 6 April 2027. 

Currently, taxable benefits in kind, (BiKs) and expenses are administered through the submission of annual forms P11D, for the tax, and form P11D(b) for Class 1A NICs. These forms are submitted after the end of the tax year. 

However, since 2017, employers have had the choice to voluntarily payroll most BiKs, (loans and accommodation have been excluded), and as part of the tax simplification project, HMRC intends to get rid of P11Ds entirely. This was meant to be from 6 April 2026 but has now been pushed back for a year, to allow software designers and employers more time to prepare. Given the significant number of extra information fields that will be introduced on the FPS report, this is understandable. 

The extra fields are similar to those on P11Ds and the P11D(b) and will include information on the benefits being provided and BiK values for the tax year. There will also be fields to show the benefit value and Class 1A NIC for the pay period, and cumulative values for the year to date. 

The effect of these new data fields on the FPS will be to merge the forms P11D into payroll, so that tax on BiKs and salary can be collected in real time. The additional details will also help HMRC to check compliance. 

What else is new in payrolling benefits? 

• HMRC will not charge penalties for payrolling benefit errors but only for the first year. 
• Registration to voluntarily payroll loans and accommodation for 2027-28 will open from November 2026. 
• Where the information to determine tax and Class 1A NICs is not available during the tax year, an Update Process (UP) will be introduced. Employers are expected to use a reasonable estimate for the value to be payrolled then use the UP to record any over-or-underpayments of tax by 6 July following the end of the tax year. 
• Employees experiencing financial difficulties, because of more than one tax year’s BiK liability being collected at the same time, can ask HMRC to spread the tax due over more than one tax year. 

HMRC has clarified instances where they will collect underpaid tax through other systems available to them, i.e. P800’s, (the end-of-year reconciliation process for PAYE), Simple Assessment and Self-Assessment. They are – 

• when the tax due is over 50% of the employee’s gross salary, 
• if employees have not received income, and 
• where BiKs have been provided after an employee has left 

Draft legislation, guidance and technical information will be provided from this autumn, and initial software technical information will be made available to software developers for feedback in December 2025.

It’s been four months since CRS VAT joined forces with PSTAX and S3TAX within the Opto Group, and we are excited to share the progress and growth we’ve experienced together. Our strategic partnership signifies a new chapter for CRS VAT while strengthening our commitment to delivering market-leading VAT and, now, Employment Taxes, consultancy to the NHS bodies.

As we continue this journey, we are thrilled to unveil our rebrand as part of the Opto Group. This fresh new look reflects our unified approach, deeper expertise, and commitment to innovation across public sector taxation. Our clients can now enjoy the same exceptional VAT services they trust but with enhanced access to a broader range of public sector tax solutions under the Opto Group umbrella.

Enhanced Public Sector Tax Services

The integration has already proven to be a significant milestone, enhancing our ability to offer comprehensive VAT services. Here’s how the partnership has been delivering for our clients:

• Comprehensive Expertise: Combining the unmatched VAT knowledge of CRS VAT with the expertise of PSTAX and S3TAX means our clients benefit from the most comprehensive, proactive tax solutions available in the market.
• NHS Focused: CRS VAT’s longstanding commitment to the NHS remains unchanged. With this rebrand, NHS clients can now access broader services across VAT reviews, Business Activities & Partial Exemption, Technical VAT support, and training – all designed to maximise VAT recovery and ensure compliance.
• Unified Support for Collaborative Projects: Our integration creates a single provider for public sector bodies under sections 33 and 41, offering seamless tax advisory and consultancy services. Whether working with local authorities or the NHS, our unified team is here to support your collaborative initiatives with trusted, specialised expertise.
• Continued Innovation: Alongside our rebrand, we remain focused on using cutting-edge technology to uncover VAT savings and streamline processes, aligning with our commitment to delivering top-tier services.

Our Rebrand – A Reflection of Growth

As we rebrand under the Opto Group, our new visual identity symbolises this exciting chapter of growth and innovation. This fresh, cohesive look underscores our unwavering commitment to providing unparalleled VAT and Employment Tax consultancy while continuing to prioritise our NHS clients’ financial well-being.

Looking Ahead

Our first four months as part of the Opto Group have been filled with achievements, and the new branding marks a continued commitment to growth. CRS VAT, together with PSTAX and S3TAX, will remain dedicated to maximising VAT recoveries, ensuring Employment Tax compliance, delivering specialised training, and ensuring that public funds are optimised. We look forward to continuing this journey with you and exploring new opportunities to serve our clients.

HMRC has introduced new penalties for late submission of VAT returns and late payment of VAT for periods starting 1 January 2023.  For NHS organisations which submit monthly VAT returns, the new penalty regime applies from the January 2023 VAT return due on or before 7th March 2023.

The new late return penalty

The new late return penalty works on a ‘points-based’ system.  For each VAT return you submit late, you’ll receive a penalty point until you reach the penalty point threshold.  There are various point thresholds and period conditions which apply depending upon your accounting period, so we have outlined below only those which apply to NHS organisations which submit monthly VAT returns.  The late return penalty will apply even on net repayment returns, where money is due from HMRC.

The penalty point threshold is 5 for NHS organisations. 

If you reach the 5-point threshold, you’ll receive a £200 penalty.  You’ll also receive a further £200 penalty for each subsequent late return while you’re at the threshold.  If you have not reached the threshold, each individual penalty point will expire automatically on the last day of the 24th month after the date on which the late return was due.  However, once you’ve reached the threshold, there are conditions which need to be met to remove the points to avoid further £200 penalties. 

These are:

Condition A – complete a period of compliance For NHS organisations, you’ll need to submit 6 monthly VAT returns on time starting from the monthly period after the late return was due.

Condition B – Submit all outstanding returns You will also need to submit any outstanding returns for the previous 24 months. The 24 months will include the period of compliance. 

Penalty points will be reset to zero on the first day where both condition A and condition B are met. You can check penalty points in your online account, and it will also be possible to appeal a point or financial penalty. 

The new late payment penalties 

The new late payment penalties apply to any payments of VAT not paid in full by the relevant due date and will be charged at different rates based on when payment is received.  This means the penalties increase proportionate to the length of time a payment is outstanding – the sooner you pay, the lower the penalty.

Late payment penalties apply to VAT due:

• On VAT returns
• Following an amendment to a return or correction
• From a VAT assessment issued by HMRC when you did not submit your return
• From a VAT assessment issued by HMRC for another reason

You’ll get a first late payment penalty if your payment is 16 or more days overdue.  When your payment is 31 or more days overdue, your first late payment penalty increases, and you get a second late payment penalty. 

The escalation of penalties can be summarised as follows:

• Payment up to 15 days overdue – none
• Payment between 16 and 30 days overdue – 2% of the VAT you owe at day 15
• Payment 31 days or more overdue – a further 2% of what was outstanding at day 15, plus 2% of what is still outstanding at day 30, plus a daily rate of 4% per year on the outstanding balance, charged every day from day 31 until the outstanding balance is paid in full

Late payment interest

As well as the potential late payment penalties, late payment interest will also be charged from the first day that the payment is overdue until the day it’s paid in full, calculated at the Bank of England base rate plus 2.5%. 

This includes amounts overdue on:

• VAT returns
• Amendments or corrections of a return
• A VAT assessment made by HMRC
• A missed VAT payment on account 

Interest will also be charged on the value of penalties if these are overdue including late submission penalties and late payment penalties.

What this means to the NHS

The late return penalty will apply even on net repayment returns, where money is due from HMRC. 

Given that NHS organisations submit monthly VAT returns, usually with COS VAT repayments, (as opposed to quarterly returns for most VAT payment businesses), NHS organisations are arguably more exposed to the new penalty regime than most commercial organisations. 

If an NHS organisation owes VAT to HMRC on either a return (such as an end-of-year partial exemption adjustment) or on an assessment of any kind, it is crucial that the VAT is paid on time in order to avoid a penalty and interest charge.

Please contact us at the earliest opportunity if you wish to discuss how these changes may affect your NHS organisation.

Gloucestershire Hospitals NHS Foundation Trust has successfully argued through judicial review in the Upper Tribunal against HMRC’s decision to block contracted-out services (COS) VAT recovery on elements of a managed healthcare facilities contract. The findings of this case could lead to increased VAT recovery on current and future contracts for other NHS bodies and an opportunity to submit retrospective claims for VAT.

Background

The Trust had contracted with a supplier, Genmed, under a single agreement for the management of operating theatre facilities.

The contract included:
• Services, consisting of maintenance, sterilisation, data analytics, training, stock contract and management.
• Goods, consisting of structural items such as furniture and plant, and re-usable medical equipment such as ventilators and microscopes.
• Consumables, consisting of single-use items such as sutures and bandages, and prostheses, such as hip and knee joints all of which are used and provided to patients during surgery.

The consumables made up around 70% of Genmed’s contract charge. The Trust had sought HMRC’s agreement to recover the VAT under COS heading 45, Operation of hospitals, health care establishments and health care facilities and the provision of any related services. HMRC agreed that the Trust could recover VAT on the services and goods, but refused VAT recovery on the consumables on the grounds that these were a separate supply of goods not closely related to the supply of the services.

The decision

The Trust was granted permission for judicial review challenging the lawfulness of HMRC’s decision, arguing that all the component parts of fully managed theatre facilities, including consumables, are integral to each other and indispensable to the achievement of the Trust’s aims. Therefore, the Trust argued there was a single supply made by Genmed, and VAT was recoverable on the whole agreement.

After reviewing both the Trust’s and HMRC’s arguments, the Tribunal agreed with the Trust. It stated that on an objective basis and from the point of view of a typical consumer, the supply by Genmed of the services and consumables are so closely linked that they form a single composite supply, being a fully managed theatre facility, that it would be artificial to split. The Tribunal then stated that the single supply of services falls under COS 45, therefore HMRC’s decision to refuse a VAT refund was unlawful.

How does this affect NHS organisations?

COS VAT recovery is generally limited to the financial year, subject to a 3-month adjustment period. However, where HMRC has instructed an NHS body that it cannot claim COS VAT on a particular supply and this turns out to be incorrect, the four-year time limit applies.

Therefore, if your NHS organisation has entered into a similar contract to the one highlighted in this case and has either been refused or assessed for VAT recovery by HMRC, you may be able to make a claim. There may also be the opportunity to review current and future contracts for VAT recovery in light of this case. This case also highlighted that HMRC has ‘limited power’ to interpret, narrow or extend the right to VAT recovery under COS. This means that many more refusals or assessments by HMRC in respect of COS VAT could be open to challenge.

Please contact us at the earliest opportunity if this affects your NHS organisation.

Yesterday the Chancellor of the Exchequer, Rishi Sunak, announced specific VAT cuts to help the hospitality sector across the UK recover from the effects of lockdown. Whilst these measures have been brought in principally to support the high street they nonetheless also apply to hospitality services provided by public bodies, including the NHS.

From 15 July 2020 until 12 January 2021, the reduced rate of VAT (5%) will apply to supplies, across the UK, of:

• food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises
• accommodation and admission to attractions

Temporary VAT cut for supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises

HMRC has published amended VAT Notices detailing supplies to which the temporary reduced VAT rate would apply and confirmed that supplies in the course of catering shall be subject to the temporary 5% reduced rate of VAT, including:

• Hot and cold food for consumption on the premises on which they are supplied
• Hot and cold non-alcoholic beverages for consumption on the premises on which they are supplied
• Hot takeaway food for consumption off the premises on which they are supplied
• Hot takeaway non-alcoholic beverages for consumption off the premises on which they are supplied

The ‘premises’ to which HMRC refer in their guidance are the areas occupied by the food retailer or, any area set aside for the consumption of food by the food retailers’ customers, e.g. a restaurant or café area.

Supplies from vending machines follow the same general principles as food and drink supplied from catering outlets, as such where typically standard rated items (e.g. crisps, confectionery, beverages, etc) are purchased from a vending machine sited in a catering premise these supplies would benefit from the temporary reduced rate of VAT. However, the same type of supplies (crisps, confectionery, beverages, etc) purchased from a vending machine sited in thoroughfares and areas not designated for the consumption of food follow the VAT liability of the product sold, i.e. taxable at the 20% standard rate of VAT.

The zero rating for cold take away food still applies, as such if you have an agreed cold take away food percentage with HMRC this should still be used to apportion sales between the reduced rate of VAT and the zero rate of VAT when calculating the output VAT payable.

Temporary VAT cut for supplies of accommodation and admission to attractions across the UK

HMRC has confirmed that the temporary 5% reduced rate shall benefit hotels, inns, a boarding house, or similar establishments, when supplying:

• Sleeping accommodation, including bathrooms, living rooms and suites
• Accommodation used for the supply of catering
• Rooms provided with sleeping accommodation

Please note, the temporary reduced rate of VAT only applies to supplies of land and property that are currently chargeable at the standard rate of VAT. Accordingly, supplies of land and property that has not been subject to an option to tax shall remain an exempt supply, as would residential accommodation charges.
We will inform you of any further VAT easements from the Government relevant to the NHS as soon as we hear.

If you have any questions about anything in this alert or would wish to discuss further please contact us.

HM Revenue & Customs has announced today that the end date for the temporary VAT zero-rating of supplies of Personal Protective Equipment (PPE) in connection with coronavirus has been changed from 31 July 2020 to 31 October 2020.

The zero-rate came into effect from 1 May and covers supplies recommended for use in connection with protection from coronavirus in guidance published by Public Health England.

This includes:

o disposable gloves
o disposable plastic aprons
o disposable fluid-resistant coveralls or gowns
o surgical masks – including fluid-resistant type IIR surgical masks
o filtering face piece respirators
o eye and face protection – including single or reusable full-face visors or goggles
We will inform you of any further VAT easements from the Government relevant to the NHS as soon as we hear.

If you have any questions about anything in this alert, please contact us.

HMRC has announced that the introduction of the DRC for construction services will be delayed for a further period of 5 months from 1 October 2020 until 1 March 2021, citing the impact of the coronavirus pandemic on the construction sector.

There will also be an amendment to the original legislation, to make it a requirement that for businesses to be excluded from the reverse charge because they are end users or intermediary suppliers, they must inform contractors in writing of this status.

The DRC is an anti-avoidance measure designed to remove the potential scope for VAT on construction services being ‘stolen’ from HMRC by unscrupulous contractors. The measure is designed to shift the accounting for VAT on supplies of construction services in certain circumstances onto the customer rather than the supplier.

NHS bodies are likely to be end-users in the majority of cases and given the requirement to inform contractors of this status, there is no ‘do nothing’ option. You will still need to prepare for implementation from March 2021 and getting this wrong could give rise to penalties. CRS VAT will provide further updates on the DRC and how it affects the NHS in the coming months. This will include working with clients to implement the changes and running seminars.

If you would like to read more, HMRC has published a new Revenue and Customs Brief (7/2020) about this, which can be found here:

https://www.gov.uk/government/publications/revenue-and-customs-brief-7-2020-domestic-reverse-charge-vat-for-construction-services-delay-in-implementation

Should you have any questions on the DRC and how it will affect your organisation please contact us.