Asked by: Lord Hunt of Kings Heath (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what dialogue they have had with QE Facilities regarding VAT avoidance schemes, in relation to wholly owned subsidiaries of NHS Trusts and Foundation Trusts.
Answered by Lord Bates
I am unable to comment on the affairs of individual taxpayers.
Asked by: Lord Hunt of Kings Heath (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what estimate they have made of the loss to the Exchequer resulting from the actions of NHS bodies in setting up wholly owned subsidiaries.
Answered by Lord Bates
HM Revenue and Customs does not hold information on VAT refunds to NHS bodies broken down to this level of detail.
Asked by: Lord Hunt of Kings Heath (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government how many Contracting Out Directions have been issued in respect of NHS bodies who have set up wholly owned subsidiaries in order to claim VAT refunds.
Answered by Lord Bates
Contracting Out Directions are not issued in respect of individual bodies. There is only one such direction issued by HM Treasury, which lists the government departments and health authorities that are eligible to claim refunds of VAT, and the services on which VAT can be refunded.
Asked by: Lord Hunt of Kings Heath (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government whether a Contracting Out Direction has been made in relation to Gateshead Health NHS Foundation Trust so that it can claim refunds of VAT, in respect of its wholly owned subsidiary company, QE Facilities.
Answered by Lord Bates
Contracting Out Directions are not issued in respect of individual bodies. There is only one such direction issued by HM Treasury, which lists the government departments and health authorities that are eligible to claim refunds of VAT, and the services on which VAT can be refunded.
Asked by: Lord Hunt of Kings Heath (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government whether the direct refund mechanism, provided for in section 41(3) of the VAT Act 1994, applies to wholly owned companies of NHS Trusts and Foundation Trusts which provide services to the NHS Trust or Foundation Trust that owns them.
Answered by Lord Bates
The VAT refund mechanism provided in section 41(3) of the VAT Act 1994 applies to government departments and NHS authorities when they are acting in their legal capacity as a functionary of the Crown. Wholly owned companies of NHS Trusts and Foundation Trusts are not eligible to receive such refunds.
Asked by: Lord Hunt of Kings Heath (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government whether the cost of VAT refunds made in relation to health bodies under the provisions of section 41(3) of the Value Added Tax Act 1994 are met from public expenditure voted by Parliament for the NHS.
Answered by Lord Bates
All NHS spend is voted on by Parliament as part of the Supply Estimates and National Insurance process. VAT refunds made to health bodies under Section 41(3) are treated within departmental budgets.
Asked by: Lord Hunt of Kings Heath (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty’s Government how much was paid in 2013–14 to compensate the National Health Service for irrecoverable VAT.
Answered by Lord Bridges of Headley
It is not possible to isolate the tax component from the overall funding for healthcare. However, VAT refunded to the NHS Trusts and Health Authorities by virtue of section 41(3) of the Value Added Tax Act 1994 is estimated at £1.9 billion in 2013/14. The figure was similar in 2010.
Asked by: Lord Hunt of Kings Heath (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty’s Government why private healthcare companies can claim tax relief on drug purchases but equivalents in the National Health Service cannot.
Answered by Lord O'Neill of Gatley
The supply of drugs is subject to Value-Added Tax (VAT) at the standard rate (20 per cent); however, no VAT is charged on drugs that are supplied on prescription and dispensed by a pharmacist.
Healthcare businesses, like high street pharmacies, supply drugs at the VAT zero rate where the pharmacist dispenses drugs on prescription direct to a patient. This includes NHS prescriptions and where drugs are delivered to patients’ homes. Any VAT incurred on the drugs would be recoverable by the pharmacy or the healthcare business.
Asked by: Lord Hunt of Kings Heath (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty’s Government what arrangements are in place to compensate the National Health Service for irrecoverable VAT.
Answered by Lord O'Neill of Gatley
NHS bodies are compensated for irrecoverable VAT in two ways. Firstly as a part of the upfront public funding for healthcare, and secondly through a special scheme in section 41(3) of the Value Added Tax Act 1994 that refunds VAT on certain contracted out services.