Maximising VAT savings for NHS coronavirus donations
8 April 2020
The NHS is already seeing generous donations in response to the coronavirus outbreak and this is likely to continue as it faces unprecedented challenges.
NHS organisations benefit from VAT reliefs on certain purchases made using donated funding in the same way as charitable bodies do. For example, resuscitation equipment, surgical masks and x-ray machines can be zero rated when purchased from donated funding (subject to certain conditions being met), whereas these items would be subject to VAT when purchased using normal NHS revenue funding. Most NHS organisations that receive regular charitable donations have teams familiar with these VAT reliefs and therefore most of these work in a VAT efficient manner under normal circumstances.
However, this may not necessarily be the case for purchases from donated funding during the coronavirus outbreak. There are various reasons for this, including:
- Urgent nature of the spend – money will rightly be spent quickly to support frontline NHS services and won’t necessarily go through the usual checking process.
- Staff shortages – staff that are still able to work may be unfamiliar with VAT reliefs available. Additionally, authorising staff may be unavailable to sign the required declaration.
- High spend/transaction volume – over a short period of time.
- Uncertainty – as to source of funding. Staff may be uncertain whether the spend is from normal revenue funding or donated funding.
- Unfamiliar purchases – equipment or goods that may not be catalogued and may not have been purchased before.
- New suppliers – if suppliers are not set up on the system, the VAT check may be missed during the approval process.
For NHS bodies who receive a significant increase in charitable donations, it is like that they will encounter some or all of these challenges. Utilising all the VAT reliefs available will ensure that the donations are spent in the most VAT efficient manner and maximise the savings opportunities available.
We have included some top tips below in order to help NHS bodies achieve this (remember that this only applies to purchases made from donated funding, not from normal revenue or capital funding):
- Familiarity with the HMRC VAT Notice for purchases made from donated funding which can be found here. Section 4.11 provides specific examples of goods and equipment that are/are not eligible for relief.
- Pre-populate VAT certificates with the basic information (e.g. name, organisation, address) and keep a copy available and ready to complete. A full list of the VAT certificates can be found here. Certificate A will be the correct certificate in the majority of cases.
- Engage with suppliers to discuss the nature of the goods or equipment if there is uncertainty.
- Where eligible goods or equipment are purchased without a certificate being completed, there may still be an opportunity to receive a retrospective VAT refund. The supplier is not obliged to provide a refund in this scenario; however, it does not present an additional cost to them to do so. We find that most suppliers are willing to help the NHS in this way and this should especially be the case under the current circumstances.
- Ask for help! Liaison Financial’s expert VAT team are available to help. Our VATflow and VATplus NHS clients already benefit from a free VAT advice helpline. However, this free helpline is being extended to all NHS organisations for coronavirus related queries.
Should you have any queries or require assistance, please do not hesitate to contact your Liaison Financial advisor, use our NHS VAT Helpline: 0800 700 652, or tell us how we can support you here.