COS VAT assessments – Tribunal confirms the right to independent review and right of appeal
The Tax Tribunal’s decision concerning Milton Keynes NHS Foundation Trust (Milton Keynes) has been published. In this important case the Tribunal has confirmed that the NHS does have the right to statutory review and appeal to the Tax Tribunal. This case was led by Liaison and it has established a point of principal that has long been resisted by HMRC. However, the Tribunal confirmed that HMRC does have the power to issue 4-year assessments for COS overclaims, but NHS bodies can now consider the Tribunal route in matters of dispute. This is a major turnaround for HMRC who had previously denied the NHS the right to appeal in COS assessments.
With regards to the ability of the NHS to recover COS VAT underclaimed, this remains restricted to the current financial-year plus the concession to include adjustments up to and including the June VAT return following the year-end.
What happens now?
Liaison is considering whether there are grounds for further appeal regarding HMRC’s power of assessment and if so, whether this is something that stakeholders want to take forward.
In the meantime, HMRC say that they will be writing to all NHS bodies where past assessments should have been accompanied by offers of statutory reviews and appeal rights. There is a reasonable case to suggest that there should be no time limit on when the assessment was issued, but it remains to be seen how HMRC propose to remedy their error.
If you have received a past assessment for COS overclaimed and consider that this was incorrect or are unsure in any way, please discuss this with your Liaison VAT advisor, so that can discuss the options with you at this stage.
We will keep you updated on any further progress of this case.