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HMRC internal manual

VAT Health

What is care? Our interpretation

Although VAT law contains no definition of “care”, we would expect that for an activity to qualify as care it would encompass looking after the generality of a person’s physical health needs. The Coleman Tribunal considered the definition of care and stated it meant:

“ … care of the patient as part of his treatment in hospital. Such treatment does not have to be as an inpatient. But it has, in my judgement, to be treatment which would ordinarily be regarded as treatment in a hospital.”

The High Court decision in the case of Kingscrest Associates Ltd & Montecello Ltd ([2002] STC 490) held that “care” in Item 4 is narrowly defined, being limited to care of a medical or surgical nature.

If care (or indeed medical or surgical treatment) is being provided, then any service supplied in the course of its provision to the patient will be subsumed within that single exempt supply. “Poole General Hospital” (VTD 10621) provided a telephone trolley service for use by patients in its wards. It argued that in providing the telephones it was providing care in a hospital. The Tribunal however found for Customs advising that “the provision of telephones, however valuable a service, is not “care”. It further found that the supply of the telephones was not a supply of goods “in connection with” a supply of care or medical or surgical treatment.

In a later, unrelated European case (Diagnostico and Therapeftiko Kentro Athinon-Ygeia AE ref: C-394/04 and C-395/04), concerning the hiring of televisions and the supply of telephone services to hospital in-patients, the European Court said these did not, as a general rule, amount to activities closely related to hospital and medical care.