NHS: VAT

(asked on 24th October 2017) - View Source

Question to the Department of Health and Social Care:

To ask Her Majesty's Government whether they intend to ensure that when NHS bodies set up wholly owned subsidiaries in order to claim VAT refunds, new staff who join those subsidiary companies are (1) employed on NHS terms and conditions, including membership of the NHS Pension Scheme, and (2) classified as NHS employees.


Answered by
Lord O'Shaughnessy Portrait
Lord O'Shaughnessy
This question was answered on 7th November 2017

National Health Service bodies are responsible for deciding locally the most appropriate structures they need to put in place 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 that ‘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.’

It would be for those subsidiary companies to decide what terms and conditions they need to offer new staff to enable them to attract the skills and talents required to deliver their services. They would need to apply for new, eligible staff to access the NHS Pension Scheme. To be eligible, they would have to be employed under a standard NHS contract (or sub contract to a NHS standard contract) and wholly or mainly (i.e. more than 50% of their work) either directly or supporting the delivery of clinical services to patients under that contract. These new staff would be classified as employees of the subsidiary company, not the NHS.

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.

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