As outlined in our February 2007 newsletter, there are changes to the VAT liability of certain medical services which are due to come into place on 1 May 2007. These will affect NHS Trusts that generate non-NHS medical income from activities such as clinical trials or occupational health services.
In our experience, Trusts usually get the liability right for ‘core’ income such as staff & visitor catering, car-parking or drug sales. Most NHS Trusts do however enter into a broad range of income generation areas where the VAT treatment may not always be considered.
The changes from 1 May represent a timely opportunity to correctly determine the VAT liability of all non-NHS income.
Getting it wrong can represent a nasty surprise if HMRC carry out an assurance visit and find that VAT has not been accounted for on certain income, potentially going back three years. Getting the liability right can however increase the potential for direct and indirect input tax recovery.
Our Review Service
We can conduct a systematic review of all income generation streams, both debtor and cash in order to determine the correct VAT treatment. Our work would involve talking to the relevant staff at the Trust to gain a good understanding of your income streams and reviewing a given list of financial reports, contracts, sales invoices and other supporting documentation which we would ask you to produce.
The results of this review would then be used to produce a tailored report including tables and flowcharts to be used to determine the correct VAT liability to be applied to your income streams.
This can then be referred to by your staff on a regular basis to ensure that VAT is accounted for correctly on all income.
Please contact us if you are interested in having a review carried out.