Court of Appeal Upholds Mainpay as Binding Precedent in VAT Exemption Case

• Mercy Global Consult Ltd (MGC) employed doctors and nurses who were seconded to recruitment agencies and then sub-seconded to the NHS.
• MGC charged VAT to the agencies but did not pass it to HMRC, resulting in a VAT assessment for £21m and MGC’s insolvency and liquidation.
• MGC’s liquidators sued the people behind MGC, who argued that MGC’s services were VAT-exempt.
• This challenged the Court of Appeal’s judgment in Mainpay Ltd, which distinguished between supplies of staff (subject to VAT) and supplies of what those staff do (potentially exempt healthcare services).
• The defendants argued that Mainpay was not binding precedent because it assumed the exemption for healthcare services was the same in UK and EU law.
• The Court of Appeal rejected this argument and stated that even if UK and EU law were not the same, it would still be necessary to distinguish between a supply of staff and a supply of the services provided by those staff.
• The court agreed with Mainpay’s distinction between supplying staff with control over their work and supplying staff without control.
• The High Court correctly refused the application to defend the liquidators’ claim based on the VAT exemption.

Source: taxscape.deloitte.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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