The dispute concerned the recovery of VAT on the goods and consumables element of a managed theatre service. HMRC had historically only accepted that the services element was claimable pursuant to the special provisions which apply to NHS bodies which contract out certain services. The VAT at stake for the Claimant was between £14m to £18m. On 30 January 2023, the Upper Tribunal released its final judgment in the Application for Judicial Review.

The UT heard argument over 4 days and decided that the Trust received a single supply of a managed theatre service which qualified for relief and that the single supply for VAT purposes included all goods and consumables. The UT also decided that even if these goods were not part of a single supply they would have been closely related to the services and hence would have qualified for the tax relief anyway.

The UT quashed HMRC’s decision with the effect that the Trust’s claim succeeded in its entirety.

The case is significant because it establishes an important precedent in respect of the application of VAT principles in determining the nature of the supplies received and the entitlement to claim a refund under COS Heading 45 where there is a very little current case law.

For the full judgment see here.

Owain was instructed by Colette van Zyl, KPMG.