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HMRC internal manual

VAT Government and Public Bodies

Government departments and health authorities: Contracted Out Services (COS) Headings: COS Heading 45 - Operation of hospitals, health care establishments and health care facilities and the provision of related services

This heading concerns the operation of healthcare premises that have face-to-face dealings with patients. The contractor does not have to provide, and is unlikely to be providing, healthcare. Thus, the focus of the heading is on the situation where the contractor provides a fully functioning building or facility within which medical and nursing professionals can treat and care for their patients. For example, the contractor may provide full facilities management support, IT support, catering, cleaning and security using its own employees (or the services of companies it sub-contracts work to). An agreement that consists of an ordinary premises lease with standard communal services only will not be covered by this Heading.


The origins of this heading lay in the type of PFI arrangement that was prevalent in the 1980s and 1990s. Over time, this type of arrangement has changed, either in terms of the level of services provided or the facility in which they are provided, but the principle remains unchanged – the contractor provides a sufficient level of services and support within the building or facility for the NHS (or other healthcare provider) to treat its patients. It covers PFI, PF2, Scottish Hub Procurement Arrangements, LIFT and non-PFI situations.


A hospital, health care establishment and health care facility is the building or facility which enables the medical and nursing professionals to treat and care for their patients and includes:

  • An entire hospital complex of buildings
  • Part of a hospital complex of buildings
  • A discrete part of a hospital, such as a ward, a theatre suite, a radiology department, a renal dialysis suite, a diagnostic suite or an MRI unit
  • An off-site facility that provides services which would normally be carried out in a hospital or  health care establishment, for example an off-site facility for renal dialysis or diagnostic purposes
  • Non-residential mental health facilities which are part of the healthcare offered by the NHS body



  • The ancillary provision of equipment together with the service of operating and maintaining that equipment, for example heating, cooling and ventilation equipment; fire protection equipment; specialised lighting; nurse call systems; and medical gas supply piping
  • Utilities when provided as a part of the whole package under the same contract and paid for within the single unitary charge - the utilities may be invoiced separately to the rest of the charges
  • Hyperbaric chambers/mobile theatres, as long as these are supplied on a fully managed and serviced basis



  • The hire of equipment alone
  • The separate supply of utilities