An NHS trust is a taxable person for the purpose of VAT on car parking, the Supreme Court ruled today in a decision which could apply to tax payments of up to £100 million. 

In Northumbria Healthcare NHS Foundation Trust v Commissioners for His Majesty’s Revenue and Customs, five justices led by Lord Hodge and Lady Simller granted HMRC’s appeal against a Court of Appeal finding that Northumbria Healthcare as a public authority was subject to a 'special legal regime'.

The case arose over HMRC's refusal to repay VAT of £267,443 which had been accounted for in car parking charges between 2013 and 2016. The judges noted that 70 other appeals by NHS bodies were stayed pending their decision 'with the total tax at stake of up to £100m'.

Northumbria Healthcare had argued in the Court of Appeal that, as it was subject to NHS guidance on car parking provision, it was operating under a 'special legal regime'.  However, citing EU Court of Justice interpretations of the Principal VAT Directive, the Supreme Court found that the Court of Appeal had been wrong. 'The legal conditions under which the trust is providing car parking services are not any different, because of their function as a public authority, from the legal conditions under which their private sector counterparts are providing.'

Unanimously allowing the appeal, the justices also agreed with the first-tier tribunal's finding that if NHS and private care parking were treated differently for the purposes of VAT, there would be a distortion of competition. 

 

Nigel Pleming KC and Howard Watkinson, instructed by HMRC Solicitors Office & Legal Services (Stratford) appeared for HMRC; Michael Firth KC and Harry Winter, instructed by BHW Solicitors (Leicester) appeared for the trust.