This judgment is about whether occupational health (“OH”) services are exempt or standard rated for VAT. At the time the decisions under appeal were made, RPS Group plc had two subsidiaries providing OH services, RPS Health in Business Ltd (“HIB”) and RPS Consulting Services Ltd, trading as RPS Business Healthcare (“BHC”). In October 2017, the subsidiaries merged to form RPS Occupational Health Ltd (“RPS OH Ltd”). We have used “RPS” in this Decision to encompass both subsidiaries, unless otherwise required by the context.
HMRC decided that services provided by the Appellants were exempt from VAT because they fell within the “medical exemption” at Value Added Tax Act 1994 (“VATA”), Sch 9, Group 7, Item 1, namely that they were “services consisting in the provision of medical care”. The Appellants appealed on the basis that they were making standard rated supplies of information and advice to employers.
RPS provides a wide range of OH services, such as medicals, heath surveillance, vaccinations, sickness absence management and drug/alcohol testing.
The extent of the disagreement between the parties, and this further disagreement between both parties and the Tribunal on the single/multiple supply question, required us to make extensive and detailed findings of fact, as well as considering the competing legal submissions and explaining our own analysis. As a result, this is a very long decision.
RPS sometimes provides clients with an OH practitioner, such as a doctor or nurse, who delivers a range of services for a fixed price from an onsite or mobile clinic. RPS also provides some clients with specific services on a bespoke basis. Mr Latter summarised these two approaches by saying:
“When RPS contracts with client employers to undertake OH services, it is usually by way of a ‘comprehensive’ contract or an ‘individual items of service’ contract.”
We decided that:
(1) where RPS provides an OH practitioner to deliver a range of services for a fixed price from an onsite or mobile clinic, this is a single indivisible economic supply of exempt services, being made up of elements which are so closely linked that it would be artificial to split them;
(2) otherwise, RPS provides separate single supplies on a bespoke basis. The overwhelming majority of these supplies are exempt, with ill-health retirement medicals, medico-legal services, administration charges and training courses being standard rated.
We therefore substantially agreed with HMRC on classification, in that we found almost all the services to be exempt. We may have differed from HMRC on the classification of the following services, where they were supplied separately:
(1) ergonomic assessments and employment questionnaires/medicals given to new employees. These are exempt. HMRC had initially accepted they were standard rated, although by the end of the hearing, Ms Newstead Taylor submitted they were part of a single exempt supply; and
(2) training courses and medico-legal services are standard rated; HMRC’s position was that they were part of a single exempt supply.
Source: bailii.org
