- The Royal Surrey NHS Foundation Trust (the Trust) sought to reclaim input VAT on the purchase of two machines known as Linacs, which are used in radiation therapy for cancer patients.
- HMRC denied the Trust’s claim on the basis that the Linacs were goods rather than supplies, and that neither the Trust nor NHS Supply Chain, which purchased the Linacs on behalf of the Trust, had an intention to use the Linacs for a business purpose at the time of purchase.
- The Trust brought a claim for judicial review against HMRC, arguing that it was entitled to the benefit of a VAT concession that allows NHS Trusts to recover VAT on the purchase of goods procured through a supply chain, provided the goods will be used for taxable business purposes.
- The High Court ruled in favor of the Trust, concluding that the Trust was entitled to the benefit of the Concession and directing that HMRC’s decision of 31 March 2021 be quashed.
- The Court found that HMRC had failed to give due effect to the Concession and had misdirected itself as to the effect of the Concession.
- The Court also found that HMRC had failed to take into account a relevant consideration, namely that at the time of the supply of the Linacs, the Trust’s intention was to use them for business purposes.
- The Court’s decision will provide some welcome clarity for other NHS Trusts who find themselves in similar circumstances.
- The decision also provides an example of when a taxpayer may be successful in applying for judicial review of an HMRC decision.
Source: rpc.co.uk
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
