COVID-19 FAQs

Any VAT incurred on purchase invoices dated 31 March 2020 or previously may now be recovered by the NHS, provided all the qualifying conditions are met, up to the December 2020 VAT return.

The December 2020 VAT return must be submitted to HMRC by the end of January 2021 with the online extension to 5 February 2021 (the last working day before the 7th of that month).

No, this will now take place in the December 2020 VAT return. Any invoices from the previous financial year going through the ledger between June and December 2020 will qualify for VAT recovery (provided all the other conditions are met).

HMRC will review this nearer to December 2020.

The 3-month adjustment period for the financial year 2020/21 applies and this one-off easement will only apply during 2020 as a result of pressures on the NHS due to the COVID-19 pandemic.

The 6-month extension to the COS deadline to the December 2020 VAT return applies to both the NHS and Government Departments.

HMRC has stated that NHS bodies should continue to submit VAT returns with actual figures wherever possible. So, for NHS trusts and boards who retain operational finance staff, VAT procedures and processes should continue as normal. Monthly VAT returns should continue to be submitted to the usual timescales to ensure that you receive prompt VAT reimbursements. HMRC has given assurance that prompt VAT repayments will continue to be made.

For any NHS bodies with no capacity or expertise to complete VAT returns, applying to HMRC for permission to provide estimates should be considered. We would however urge a degree of caution before considering estimating VAT return figures and ask that you contact your Liaison Financial VAT advisor before taking any action. Use of estimated figures may ease immediate resourcing issues but can lead to potential VAT accounting errors in the future.

HMRC’s announcement is welcome news, although adjustments for 2019/20 can still be included on VAT returns prior to December and there may be good reasons for doing so if that is possible. For example, the December 2020 easement means that you will have two deadlines for adjustments within a 6-months period (the deadline for VAT incurred in 2020/21 remains as the June 2021 VAT return). Further, recovering COS VAT as soon as possible aids cash-flow at a time when this may be critical. It is also worth remembering that VAT can be reclaimed as soon as you receive a VAT invoice and before payment is made.

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No – only from outside EU.

Yes – provided they are purchased direct from outside EU.

No VAT will be accounted for as usual which will be non-recoverable.

The relief on the imports applies to all organisations – NHS, Government Departments or commercial companies and charities. Whichever organisation imports the goods receives the relief on VAT and import tariffs. If the NHS purchases the goods from a UK based supplier, then VAT will be charged as normal at the standard rate. This VAT will be on goods so no scope for VAT recovery under the COS rules.

Yes, provided an exemption certificate is given to the supplier when the goods are procured, and they are qualifying goods then the zero rating will apply.

Some top tips include (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 (0800 700 652). However, this free helpline is being extended to all NHS organisations for coronavirus related queries.

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This does not apply to funding from the Government – only funds donated to the NHS through a charity or endowments.

Yes, our expert VAT team are available to help on 0800 700 652.

We have a number of upcoming webinars that will update on the latest VAT implications for the NHS, please register for your preferred slot here or alternatively, you can view a recording of the webinar at a time that suits you here.

We can submit estimated VAT returns to HMRC. If this relates to COS VAT, then we will require approval from HMRC, but output tax and input tax follow the usual rules for error notifications to HMRC.

There is no scope for VAT recovery under the COS rules.

There is no scope for VAT recovery on the renting or leasing of a temporary mortuary.

Agency nurses are VAT recoverable under COS heading 41.

There would be limited scope for VAT recovery under the capital rules.

There would be scope for partial VAT recovery under the capital rules.

The estimation rules on COS only apply to the NHS and approval is required from HMRC before estimating any COS VAT recovery. The regular VAT rules on estimation and subsequent notification to HMRC will apply for subsidiary limited companies.

We can assist in preparation of the VAT return.

VAT can only be recovered on invoices dated up to 31 March 2020 on the December 2020 VAT return. An accrual should take place on this VAT return for any outstanding invoices. This VAT return must be submitted to HMRC by 7 February 2020.

You must tell HMRC about the changes within 30 days. This may be done through the online portal.

Yes, there is scope for VAT recovery under heading 2.

VAT may be recovered on invoices dated up to 31 March 2020 by the December 2020 VAT return. Invoices dated from 1 April 2020 to 31 March 2021 must be recovered by the June 2021 VAT return. Only qualifying services will be eligible for recovery under the COS guidance.

Liaison Financial is more than happy to assist with the preparation of the VAT return. We would require the last completed return along with the downloads of data from purchase and sales day books, cash book and salary deductions.

There will be no scope for VAT recovery on car parks under business activities if the parking is provided free of charge to staff, patients and visitors. However, there will still be scope for VAT recovery under the contracted-out services rules provided the qualifying conditions are met.

Potentially there could be under the capital goods scheme of any car parks built in the last 10 years where VAT has been recovered in full under business activities.

VAT will still be payable on the goods and there will be no scope for VAT recovery if the goods are used by the trust.

COS heading 14 for IT expenditure is still under review by HMRC.

Yes – provided the goods were received from 1 May 2020 onwards and the pro forma was received in the previous 14 days then there would be scope for this to be a zero rated supply to the NHS.

A recharge to another NHS organisation in the same country administrative divisional registration will be outwith the scope of VAT. No VAT should be charged between the two NHS organisations. However, since there is no scope for VAT recovery on the April invoice the gross cost should be recharged on which would include the VAT incurred by your NHS organisation.

No – the VAT refund should come from the supplier. You should only pay the net amount. The supplier should provide a full credit note and new invoice or a VAT only credit note.