VAT recovery is very restricted for the NHS. At Elysian Associates we work with the Trusts to maximise VAT recoveries and minimise irrecoverable VAT costs, through careful application of the Contracted Out Services rules, review of capital projects and income generation activities. We also support staff to identify opportunities where VAT recovery may be being missed or restricted incorrectly or unnecessarily.

Employment Taxes

NHS employers do not enjoy any special treatment from HMRC when it comes to meeting their PAYE, National Insurance and benefit in kind reporting obligations and we advise a number of NHS bodies in dealing with these issues.

Employer Compliance Reviews (PAYE Audits) are undertaken regularly by HMRC where key areas of focus include the following:

  • Travel expenses – some medical staff may qualify to receive reimbursement of travel expenses free of tax/NIC in respect of emergency call outs.  There are strict criteria applied by HMRC as to when this is permitted and care should be taken to ensure that this is reviewed on a regular basis.
  • Bank staff – it is not uncommon for individuals to hold two or more employments within the same NHS Trust, e.g. as a regular and a bank nurse.  Where this applies, the earnings must be aggregated from both employments for NIC purposes unless the employer is able to demonstrate that this is not reasonably practical to do so. HMRC takes a very strict line on this issue and can lead to significant retrospective liabilities being sought where this issue has not been properly addressed.
  • Employment status – like many large organisations, the NHS engages many self-employed individuals undertaking a variety of tasks.  Care should be taken to ensure that the terms under which they are engaged support self-employed status and that they are not actually employees that should be subject to PAYE and Class 1 NIC.

We can help minimise your Trust’s risks relating to these and other related employment tax matters, including salary sacrifice arrangements, Construction Industry Scheme and the tax/NIC treatment of termination payments.

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