§ Lord Harrisonasked Her Majesty's Government:
Why ambulance services which maintain in-house vehicles leased to them by commercial firms will from 1 April 2004 be disqualified by Customs and Excise from reclaiming the VAT element of such maintenance and related expenditure. [HL1364]
§ Lord Davies of OldhamUnder the VAT Act 1994, NHS bodies are able to recover the VAT they incur on certain outsourced services. These services include the leasing of vehicles provided under a contract that also includes their repair and maintenance. This law does not allow recovery of VAT in respect of the leasing of 55WA vehicles where the contract for a leased vehicles does not also provide for maintenance services.
Some NHS bodies have been wrongly recovering VAT in these circumstances. The Government have allowed a transitional period until 31 March 2004, after which VAT paid on vehicle leasing should be met from within the funding allocated to the NHS, as required by VAT law and laid down in the Department of Health's accounting guidelines for the NHS.