Milton Keynes Hospitals NHS Foundation Trust v Her Majesty’s Revenue & Customs

Tuesday 15th June 2021

Milton Keynes Hospitals NHS Foundation Trust (MK) appeal the decision of the Upper Tribunal (Tax and Chancery Chamber) dated 23 July 2020, Zacaroli J and UTJ Thomas Scott sitting, dismissing MK’s appeal against the decision of the First tier Tribunal dated 29 April 2019.

The UK has 2 main public sector VAT refund schemes; set out in the Value Added Tax Act 1994 (VATA) at s33 (relating to public authorities) and s41 (relating to government departments and NHS authorities). The s41 scheme is called Contracted Out Services VAT (COS  VAT). In this case MK incurred expenditure on the installation of a computer system. MK paid VAT on the price to its supplier then reclaimed the VAT under the COS VAT scheme.  HMRC raised an assessment dated 17 July 2017 for overclaimed VAT under s73 (2) VATA.

MK appealed against that assessment on 2 grounds (1) that the assessment  to VAT was invalid because MK (and other such bodies) could not be assessed to tax under s73 (2) (2)the VAT in issue was recoverable in full under the COS VAT rules. The FTT and the UT both dismissed the appeal on (1). The UT found any such assessment can be appealed to the FTT. The appeal here is concerned with (1).

Lower Court Judgment:

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