Northumbria Healthcare NHS Foundation Trust (Respondent) v Commissioners for His Majesty's Revenue and Customs (Appellant)

Hearing listed

Case summary
Appeal

Case summary

Case ID

UKSC/2024/0048

Parties

Appellant(s)

Commissioners for His Majesty's Revenue and Customs

Respondent(s)

Northumbria Healthcare NHS Foundation Trust

Issue

Did the Court of Appeal err: (i) in its conclusions as to the objective and correct interpretation of the legislation applicable to determining whether the Trust was a taxable person for the purposes of Value Added Tax (“VAT”). (ii) in its understanding of the facts that need to be proved in order to determine whether there is a significant distortion of competition under the applicable legislation.

Facts

This appeal concerns whether supplies of car parking should have had VAT charged on them. Ordinarily, VAT is charged on the supply of goods and services. However, there is a derogation where a supply is made a body governed by public law which would otherwise be taxable but which is ‘acting as a public body’. A body is ‘acting as a public body’ if it acts under a ‘special legislative regime’ (“SLR”). Acting under an SLR means that when carrying out the relevant activity, the public body is operating under different conditions of national law to those applicable to private operators carrying out the same activity. If the derogation applies, the public body is not treated as a taxable person and so it does not have to charge VAT on its supply of the relevant goods or services. However, even where the derogation would apply, if treating the public body as non-taxable would lead to ‘significant distortions of competition’, the public body is restored to being taxable. This appeal relates to the Trust’s supply of paid-for car parking at various of its sites between March 2013-2016. The Trust argued that non-mandatory guidance from the Department of Health as to how the Trust should carry out its commercial car parking operations, in conjunction with the public law obligation to follow such guidance unless there was a good reason not to, amounted to an SLR. The Trust argued this meant it was not a taxable person when it supplied car parking. Alternatively, the Trust argued that provision of car parking was closely linked to its functions of providing healthcare and so it was not a taxable person when it supplied car parking. On this basis, the Trust made a claim for overpaid VAT. HMRC rejected the Trust’s claim and both the First-Tier Tribunal (Tax Chamber) (“FTT”) and the Upper Tribunal (Tax & Chancery Chamber) (“UT”) dismissed the Trust’s appeal. The Court of Appeal allowed the Trust’s appeal. HMRC now appeals to the Supreme Court.