02 June 2020 
Andrea Marshall, Tax Specialist
The First Tier Tax Tribunal has recently issued two decisions that relate to medical exemption that may be useful to members who are looking at the VAT liability of medical services, or trying to determine the difference between a supply of staff and medical services.
The first is Window to the Womb (Franchise) Limited, decision number TC 07687. This case considered the VAT treatment of supplies of ultrasound scanning services to pregnant women. The issue being considered was whether the supplies were standard rated for VAT purposes as HMRC (as a “baby bonding experience” as emphasised in much of the marketing material) or exempt supplies of medical care as the appellants contended.
The scans were carried out by qualified sonographers who were registered with the Health and Care Professions Council, full members of the Society of Radiographers and hold professional indemnity insurance providing cover for mis-diagnosis. Various packages were offered for inclusive prices (which including the scan itself, photographs and videos).
The tribunal agreed with Window on the Womb and ruled that the supplies were exempt from VAT.
The second case, Mainpay Limited, decision number 07690. considered the supplies of locum doctors mainly to the NHS via an intermediary; HMRC contended that the supplies were standard rated supplies of staff, whilst Mainpay argued that the supplies were ones of exempt medical care. Paragraph 119 of the decision best summarises the finding of the Tribunal, i.e. that Mainpay were making standard rated supplies of staff:
In cases such as this, operational control is more important than it might be in other cases. In particular, control over when, where and what work the consultant carries out. In our view the consultants engaged by Mainpay carried out their work within the framework of the NHS Trust, in the sense that they operated within the remit of local policies laid down by the NHS Trust. Mainpay’s consultants were incorporated into the organisation of the NHS Trust in the same way as a consultant who might have been employed directly by the NHS Trust. Mr Firth described the question in terms of “what is the essence of the supply”. Based on the evidence as a whole we regard the essence of the supply as being that of staff, rather than medical services.
