Oral Answers to Questions

Karin Smyth Excerpts

Tuesday 6th February 2018 Commons Chamber

[Mr Hunt]

The hon. Lady is absolutely right to highlight that area. It is one of six high-impact areas we are focusing on throughout the country. We are making progress, but we know we could do a lot better.

[Karin Smyth (Bristol South) (Lab)]

9. If he will hold discussions with the Chancellor of the Exchequer on the VAT status of NHS trusts.

[The Minister of State, Department of Health and Social Care (Stephen Barclay)]

There are no plans to hold discussions with the Chancellor of the Exchequer on the VAT status of NHS trusts.

[Karin Smyth]

I am grateful for that reply, although I suggest it ought to be reconsidered. NHS trusts desperate to avoid financial difficulties appear to have found a new magic money tree: setting up wholly owned subsidiaries to avoid paying substantial amounts of tax to the Treasury. Rather than encouraging this tax dodging and further fragmenting the NHS, why do the Secretary of State and his friend the Chancellor not either ban this practice or agree to let them all have the VAT exemptions?

[Stephen Barclay]

The Department wrote to all NHS and foundation trusts in September 2017 to remind them that tax avoidance schemes should not be entered into in any circumstances, but the hon. Lady makes a slightly strange point. She seems to be arguing that NHS hospitals are, in essence, paying too much tax to the Treasury, rather than having that money within the NHS. These subsidiaries are 100% owned by trusts themselves.