Local government partnership programmes: examples: section 75 NHS Act 2006 partnerships
Under section 75 of the NHS Act 2006, local authorities and NHS bodies may build closer working partnerships. These partnerships may be established in 1 of 2 ways:
- A pooled funding arrangement whereby each party procures goods and pays for them from the joint funds.
- An agency arrangement whereby the cross-charging for management services, etc., gives rise to taxable supplies (see VATGPB6700).
Local authorities and NHS bodies are subject to different funding regimes and VAT treatment. The following VAT procedures apply to arrangement 1 above.
Each partner makes a contribution to the budget, either financially or in kind, but retains statutory responsibility for its own service. For efficiency reasons NHS bodies have the option to delegate some of their responsibilities to other partners.
It is unlikely that partnerships will make supplies for VAT purposes as they mainly exist to obtain benefits from pooled funding. VAT is recoverable according to the VAT regime that applies to the body delivering the services. If the partners agree that delivery is by a local authority, VAT be recoverable under section 33 (see VATGPB4000). If delivery is by an NHS body, VAT may be claimed as a refund under the contracted out service regime (see VATGPB9700).
For further guidance please see the HMRC/Department of Health and Social Care agreement.
20180102 HMCE DOH guidance June 2003.pdf