8 July 20242 minute read

The UT upheld the FTT’s decision that supplies of prescription drugs and contraceptives in the UK were components of single VAT exempt supply of healthcare services

Spectrum Community Health CIC (Spectrum) provided VAT exempt healthcare services in prisons in England pursuant to a contract with NHS England (NHSE). Spectrum contended that its supplies of prescription drugs and contraceptives were separate zero rated/reduced rated taxable supplies, allowing Spectrum to recover input tax attributable to these supplies.

The FTT’s decision that Spectrum had made a single exempt supply of ‘primary healthcare or health and social care’ where supply of drugs and contraceptives were only components of single supply, was appealed before UT on several grounds.

The UT upheld FTT’s decision and dismissed Spectrum’s appeal on all the grounds, noting that there was no error of law in the order in which the FTT had chosen to deal with the issues, and that the ECJ cases (Commission of the European Communities v United Kingdom of Great Britain and Northern Ireland C-353/85 and Finanzamt Dortmund-West v Klinikum Dortmund gGmbH C-366/12) were not authority for departing from the core principles for determining single and multiple supplies. The UT also added that in determining the single/multiple supply question, it was necessary to view the transaction from the perspective of the typical consumer which in this case was the NHSE (and not the prisoners). Furthermore, the UT was not convinced that there were multiple supplies because of factual indicators such as different prison locations, different identifiable pricing, different specialists involved at different times when services were provided, if viewed from NHSE’s point of view.


Key takeaway

This case is a reminder of the fact that when determining whether a supply of services amounts to a single/multiple supply, the transaction should be viewed from the perspective of the recipient of the supply, and not a third party benefiting from the supply, if they are different persons.

Also, different specifications for the various services or the fact that elements within a single price paid can be identified is not of any significance and it does not mean that the supply of services amounts to a multiple supply. Care needs to be taken as to whether the supply is a single or multiple supply before determining whether the supply falls within a particular exemption as that will be the approach adopted by the tribunals and courts.