Question to the Department of Health and Social Care:

To ask the Secretary of State for Health and Social Care, what assessment had been made by DHSC or provided to DHSC by NHS England about the potential impact on the NHS of proposed changes to introduce the full refund model for VAT in the NHS.

The Department has not made a formal published assessment of the potential impact on the National Health Service of the proposed changes to introduce a full refund model for VAT under section 41 of the Value Added Tax Act 1994.

The Department of Health and Social Care and NHS England have engaged with HM Treasury and HM Revenue and Customs through cross-Government discussions to understand the potential implications of the proposals for the NHS, including the interaction with NHS funding flows and the principle that any reform would need to be fiscally neutral.

NHS England has provided input to the Department to support this engagement, including analysis of existing VAT recovery arrangements and high-level consideration of the potential impacts of moving from the current Contracted Out Services regime to a full refund model. This work has been undertaken to inform cross-Government discussions and data-gathering exercises led by HM Treasury, rather than as a standalone assessment of the impact on NHS services.