TC09678 - [2025] UKFTT 01320 (TC)

Fecha: 22-Oct-2025

Relevant law

Relevant law

The relevant legal provisions we must apply are Article 132(1)(b) PVD and Item 4, Group 7, Schedule 9 VATA (Item 4) (as set out above in the Appellant’s GoA).

10.

Also relevant are:

(1)

Article 134 PVD which provides that a supply of goods or services shall not be granted exemption as provided for in all the provisions of Article 132(1) which concern the supply of closely related goods/services (a) where the supply is not essential to the transactions exempted and (b) where the basic purpose of the supply is to obtain additional income for the body in question from activities carried on direct competition with those of commercial enterprises subject to VAT.

(2)

Note (8) to Group 7, Schedule 9 VATA (Note 8) provides the definition of “state regulated”: as meaning “approved, licensed, registered or exempted from registration by any Minister or other authority pursuant to the provision of a public general Act, … Here “Act” means (a) an Act of Parliament …”

11.

There was substantial agreement between the parties on the law. This agreement being derived from the amended GoA drafted on the Appellant’s behalf by Michael Firth KC and HMRC’s skeleton argument, as confirmed in the hearing. It was agreed that:

(1)

Item 4 needed to be interpreted in a way which conformed with the provisions of Articles 132(1)(b) and 134 Principial VAT Directive.

(2)

The principle of conforming interpretation continued to apply in this appeal despite Brexit (in this regard see the analysis of the continuing relevance of European Law as set out in Isle of Wight NHS Trust v HMRC [2025] UKFTT 01114 (TC)) (IoW).

(3)

Consistent with such interpretation Item 4 exempts supplies of both goods and services which are closely connected to medical care (as determined in Northumbria NHS Healthcare NHS Trust v HMRC [2021] UKFTT 0071 (TC)) and not simply goods.

(4)

Further, to qualify for exemption, a supply which was factually established to be closely related to the provision of hospital and medical care, must be supplied “by” a duly recognised establishment of similar nature to a hospital or medical treatment centre i.e. a state regulated institution as defined in Note 8. The reference to such supplies being in hospitals in Item 4 being so construed.

(5)

The exemption under Item 4 for closely connected supplies did not require the supply under consideration to be made to the recipient of the medical care.

(6)

To qualify under Item 4, the Appellant therefore needs to evidence both that:

(a)

it is in EU terms a duly recognised establishments of a similar nature to a hospital and in domestic terms a state regulated institution meeting the terms of Note (8); and

(b)

the supply of staff made by it was closely related (in the sense informed by the terms of Article 134 PVD and the relevant case law of the Court of Justice of the European Union (CJEU)) to the provision of medical care which was itself exempt under Item 4 provided by the hospitals and care homes which received the Appellant’s supplies.