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HMRC internal manual

VAT Health

HM Revenue & Customs
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Is the supply made in a hospital or state-regulated institution? Which institutions can qualify for exemption?

In principle the exemption applies to care and treatment supplied in both private and NHS hospitals although in practice the provision of care by NHS hospitals is usually non-business and so outside the scope, not exempt.

State-regulated institutions include hospices and nursing homes which come under the provisions of:

  • The Care Standards Act 2008 - (England and Wales)
  • The Care Standards Act 2000 - (Wales)
  • The Regulation of Care (Scotland) Act 2001; or
  • The Health and Personal Social Services (Quality Improvement and Regulation) (Northern Ireland) Order 2003

as appropriate.

Approval must be given formally and in writing by the appropriate, national regulator. These are:

Nation Regulator
England Care Quality Commission
Northern Ireland The Health and Personal Social Services Regulation and Improvement Authority
Scotland Scottish Commission for the Regulation of Care
Wales The Care Standards Inspectorate for Wales

It is not necessary for the supply to be made to the patient, in order for exemption to apply. Gambro Hospal Limited provided dialysis treatment to patients referred to it by Guys and St Thomas NHS Trust. In its appeal it argued that the supply it made to the Trust was not medical treatment but a package of services amounting to the operation of a healthcare establishment and the provision of related services. In its decision (VTD 18588), the Tribunal said:

“Item 4 … is not worded in such a way as to suggest that the identity of the recipient of the supply is of the essence. The provision of care or medical or surgical treatment will of course be to a natural person but that does not mean that from the VAT point of view the supply cannot be to a legal person… “