Northumbria Healthcare NHS Trust loses £267k VAT appeal

Northumbria Healthcare NHS Trust claimed parking was "closely related" to healthcare provision

A health trust has been refused permission to reclaim thousands of pounds paid in VAT on parking charges.

Northumbria Healthcare NHS Trust challenged HM Revenue and Customs' (HMRC) rejection of its claim for £267,443 at a tax tribunal, but lost.

Executive director of finance Paul Dunnat said health bosses "respectfully disagree with the position taken" by the judgement and planned to appeal.

HMRC said it would be contacting other NHS bodies who had made similar claims.

The trust had sought to recoup "overpaid" VAT on pay and display charges, claiming hospital parking was "closely related" to its provision of medical services, which are exempt from VAT.

But the first tier tax tribunal agreed with HMRC that parking was not integral to the provision of exempt medical services and was, therefore, not exempt itself.

The trust argued that not all of its sites had public transport provision

Judge Greg Sinfield also considered the fact that at some sites patients were able to travel by public transport or use alternative parking facilities.

Tax experts have asked whether the result will affect students parking at colleges, something which is currently exempt from VAT.

In its blog, tax consultant RSM said the judgement would be "very disappointing" for other trusts making similar claims.

RSM technical associate director Sarah Halstead said: "What may be of greater concern, though, is whether HMRC will continue to support its policy of exempting parking and catering for college students, given the legal framework and principles are fundamentally the same as for hospitals.

"The Northumbria case may provide just the excuse HMRC needs to remove this relief.

"That is unless HMRC truly believe it is more essential for a student to park and eat at their educational institution than it is for a patient to attend their medical appointment."