Minutes HFMA VAT Technical Sub-Committee CIPFA, 77 Mansell Street, London E1 8AN 14 September 2016 MEMBERS PRESENT HFMA STAFF/GUESTS PRESENT Ian Hanley Chair Ian Dean Paul Jones Sarah Hogan Gary Mincher Neil Morton Arnold O Bierne Anthony Robson Richard Sharp Michael Sheils Shelley St John Sally Wilson VAT profession Richard Lodge Steven Rourke Phil Simmons Philippa Bish Alastair Pamphilon Debbie Watts Stuart Grant
1. Welcome and apologies for absence Ian Hanley welcomed everyone to the meeting. Apologies were received from Edward Andrews, Michael Creaton, Tracy Drake, Colin Hall, Michael John, Anne Moffat and Jo Turner. The committee also welcomed Phil Simmons, who is replacing Steve Rourke as the Deloitte representative, and Debbie Watts from. The committee was informed that Jo Turner will no longer be attending these meetings due to a recent change of role within. Details regarding her replacement will be confirmed in due course. 2. Membership 2.1 Steve Rourke It was agreed that Steve Rourke should remain on the committee as he is due to start a new role at Gateshead Health NHS Foundation Trust. It is envisaged that Steve Rourke and Anthony Robson (also at Gateshead) will attend on a rotational basis. 2.2 NHS Shared Business Services (NHS SBS) The committee considered a request from NHS SBS for representation on the committee. NHS SBS is a joint venture between the Department of Health (51%) and Sopra Steria (49%) and historically committee membership has been limited to NHS employees plus invited members. Given the direction of travel for back office services, with the spinning out of CSUs, shared services with local authorities and more involvement from private sector companies, it was questioned whether this approach was applicable going forward. The committee membership tries to cover all types of NHS bodies. It was decided that the Terms of Reference should be reviewed at the next meeting with a view to establishing a clear protocol for membership going forward. The committee will make a decision once these deliberations are concluded. will circulate the Terms of Reference well before the next meeting. There was also concern expressed at the current size of the committee (almost 30 members) and that any growth in membership might prove difficult to accommodate. It was agreed that would monitor attendance of future meetings and that the membership of individuals who did not attend for 12 months would be reviewed by the committee. 3. Minutes of the last meeting The minutes of the meeting held on 11 May 2016 were considered an accurate record.
4. Audit trail of matters arising The committee considered the audit trail of matters arising, prepared by Mark Jenkins with assistance from Ian Hanley and Steve Rourke. The committee felt that it was a very useful summary of all the issues pertaining to each item. Mark will include as an appendix to the agenda going forward. 5. Matters arising 5.1 3.2 Leased cars in the NHS Alastair Pamphilon confirmed to the committee that the interim note recently issued constitutes current guidance; a finalised guidance note will be issued at a later date to be confirmed. It was agreed that the interim note should cover most scenarios with regard to the VAT treatment of salary sacrifice lease cars in the NHS. is willing, however, to engage with those groups or individuals who have concerns regarding activities which they feel continue to fall outside the scope of this guidance. It was pointed out to that the wording in the draft stating that [t]his VAT treatment is retrospective back to 1 January 2012 is not wholly enforceable due to the operation of the four-year rule. The committee requested that this item remain as a matters arising for the next meeting, with a view to it possibly being discharged from the agenda at that point. Mark will publish the interim note on TISonline as soon as possible. 5.2 3.3 Error Correction and COS / informed the committee that he is still awaiting clarification of a few points from the legal team. 5.3 3.4 Four-year cap reported that this issue is still with the Treasury. A number of factors have recently delayed its deliberations, including Brexit and the on-going Finance Bill, but he will report back to the committee once the Treasury communicates its agreed position. 5.4 3.6 Technical issues with the VAT Recovery Method Stuart Grant reported that continues its work on the VAT recovery framework, with particular feedback requested on trial balances. Stuart Grant will meet with Anthony Robson subsequent to this meeting to establish the background, with a view to possibly reconvening the small working party (formed from this committee and which originally discussed this issue) to elucidate on any further points. will contact in the first instance if it is deemed necessary to arrange a meeting of the working party. (/Working party) 5.5 3.7 NHS healthcare income via commercial entities
Paul Jones reported that he and are due to meet with the Treasury and the Department of Health later today. Paul Jones will then further progress his paper in the light of these conversations and report on progress at the next committee meeting in January 2017. Paul Jones 5.6 3.8 Agency staff explained that this was an ongoing issue that is being looked at by another policy team; there was nothing to report for this meeting. 5.7 5. Tax point rules for contracted out services informed the committee that he is currently in discussion with NHS SBS and others relating to issues around bad debt relief on invoices which would not be paid and the correct procedures to follow. Once he has received clarification on these points he will provide an update on progress with the report currently being drafted. 5.8 Apprenticeship levy has asked the Treasury to clarify which department (either Business, Innovation and Skills or the Department for Education) will be responsible for the apprenticeship levy. expect most of the training providers will be exempt bodies under Schedule 5 of the VAT Act 1994. Treasury and are to meet with the responsible department to discuss the processing of the invoices under this scheme so that the VAT treatment is correct. will report back at the next meeting. 5.9 VAT on agency medical staff reported that this issue is still with the Treasury. He also informed the committee that paramedic services were also being considered. He will report back on progress at the next meeting. 5.10 COS Heading 33 Library Services Paul Jones reported that he had had a response from rejecting the recovery of VAT on electronic library services. The committee, however, felt it warranted further work and a second submission, particularly around the interpretation of what constitutes a library service within an online context. It was agreed that Paul Jones would map the spectrum of services with a view to producing a further briefing for consideration, meanwhile committee members were invited to send examples and any information they have relating to contracts to Paul Jones. Paul/Committee 6 VAT briefs The committee noted the circulated Revenue and Customs Brief 11 (2016): VAT and the Transfer of Ongoing Concern.
7 Briefing on VAT Impact of Commissioning Support Unit (CSU) spin out of NHS England Control Paul Jones outlined the issues pertaining to this briefing. The CSUs will be spun out of NHS England and removed from the NHS Divisional Registration from 1 April 2017. Certain services supplied by CSUs are not within the current COS headings, and there is a concern that there will be a substantial amount of irrecoverable VAT incurred by the sector under the new arrangements; the anticipated VAT impact per annum is between 10m and 115m, with a best guess figure suggested to be around 40m. This briefing argues that the preferred option would be the expansion of the COS headings to allow for VAT reclaim on these services. As Trusts also purchase services from CSUs the committee asked that clear definitions of the services covered should be included in any new headings. reported that this issue will be picked up at the meeting later today (mentioned under 5.5) with the Treasury and the Department of Health (which he and Paul Jones are attending) and they will report back to the committee in due course. /Paul Jones 8 VAT Liability of the sugar levy 9 P22 Ian Hanley confirmed that Treasury has finalised its guidance on the sugar levy and it was agreed that this item should be discharged from the agenda. Ian Hanley raised the issue of whether the new P22 National Framework will be subject to the same COS rules as P21. reported that he is due to meet with the Department of Health on 30 September 2016 to clarify this issue and will report back to the committee soon after. 10 IR35 rules Ian Hanley (on behalf of Michael Creaton) raised the issue of the proposed new IR35 rules for the public sector, which are due to start from April 2017. He was particularly interested in the implications for locum doctors/senior managers of the move to limit the employment tax loss through personal service companies. indicated that this issue will be addressed in the Autumn Statement, scheduled for 23 November 2016, at which point an online tool and guidance will be made available. 11 VAT Health information stream Mark is due to meet with Deloitte on 3 October 2016 to progress on-going editorial updates and consider any issues which arise from this meeting.
12 Any other business 12.1 Richard Sharp Richard Sharp informed the committee that he would be standing down with immediate effect. The committee thanked him for his contribution. 12.2 COS guidance migrating to GOV.UK Shelley St John requested clarification on whether the COS guidance still to be transferred to GOV.UK will differ in any substantial way from the previously issued PDFs. reassured the committee that the outstanding COS guidance awaiting transfer to GOV.UK will not differ from previously issued documentation, which had special arrangements for the NHS for COS Heading 52. 12.3 Format of future meetings (video conferencing) The committee speculated whether it would be possible to offer video conferencing in the future, especially for those members who are finding it difficult to attend meetings due to travel costs and/or general pressures of work. It was agreed that the following would explore the possibility of providing video conferencing to members for future meetings: 1. (CIPFA regional offices) 2. Paul Jones (Department of Health) 3. Phil Simmons (Deloitte) Individual committee members were also urged to check resource within their organisations in case they were unable to attend any of the locations above. 13 Date of next meeting /Phil Simmons/Paul Jones/Committee The next meeting will be held on Thursday 26 January 2017. The following meeting was provisionally scheduled for Thursday 25 May 2017, subject to room availability. Mark will confirm in due course. Mark Item Action Allocation 5.1 Finalised guidance note to be issued at a later date. Interim note to be published on TISonline. Alastair Pamphilon/Mark Jenkins 5.2 Clarification awaited from legal team.
5.3 Issue still with the Treasury, report back once agreed position communicated. 5.4 to meet with Anthony Robson regarding VAT recovery framework, also possibly reconvene working party. 5.5 Meet with Treasury/DH. Report back on progress at the next meeting on 26 January 2017. 5.6 Report back when there is progress on the VAT liability of agency staff supplies. 5.7 Resolve bad debt relief issues following consultation with NHS SBS and other bodies, and report back to committee. 5.8 Clarify with Treasury which department will process invoices and raise concerns as outlined in briefing. 5.9 Waiting to hear from Treasury with regard bringing agency medical staff within the scope of COS headings. Stuart Grant/Philippa Bish/Working party Paul Jones/ 5.10 7 Prepare a further briefing for the committee on the definition of library services within an online context. Meet with Treasury and DH regarding potential loss of VAT recovery under new arrangements whereby external parties provide services previously covered by CSUs. Paul Jones /Paul Jones 9 Provide clarification on P22 following meeting with DH on 30 September. 10 Provide clarification on IR35 rules following Autumn Statement. 12.3 Explore possibility of video conferencing at CIPFA, DH or Deloitte. Members to also check resource within their own organisations. /Paul Jones/Phil Simmons/Committee