Question to the Department of Health and Social Care:

To ask Her Majesty's Government what action they have taken to ensure that when NHS bodies set up wholly owned subsidiaries in order to claim VAT refunds, NHS staff transferred to those subsidiary companies retain their terms and conditions, including membership of the NHS Pension Scheme.

National Health Service organisations are responsible for deciding locally the most appropriate structures they need to deliver services to their patients within available resources, meeting any tax liabilities that may arise. Recent guidance to NHS trusts and foundation trusts from the Department states ‘the only tax advice that the Department deems acceptable is that necessary for the fulfilment of statutory functions and or to assist with compliance with tax rules beyond in house expertise. Tax avoidance schemes should not be entered into under any circumstances.’

Any NHS staff compulsory transferred to subsidiary companies that may be set up by NHS bodies should, subject to legal advice, be covered by Transfer of Undertaking Protection of Employment legislation, in respect of their terms and conditions of service, and Her Majesty’s Treasury’s New Fair Deal guidance, in respect of their continued access to the NHS Pension Scheme.

NHS Improvement is working with the NHS to ensure adherence to relevant legislation and guidance, as well as encouraging the sharing and adoption of best practice in working with employee representatives and unions on these issues.

Note: HM Treasury’s New Fair Deal guidance requires that NHS employees who transfer compulsorily from a NHS body to an independent organisation retain access to the NHS Pension Scheme in their new employment. This occurs where the function performed by the transferring employees has been outsourced by the provider or the service put to tender by the commissioner.