Future Health Technologies Ltd v Her Majesty's Revenue & Customs, V 20963

20963

VAT – Principal VAT Directive of 28 November 2006 article 132.1 (b) and (c) – whether services of collecting, testing, processing and storage of umbilical cord blood stem cells for future therapeutic use exempt from VAT in whole or in part – reference to European Court of Justice

MANCHESTER TRIBUNAL CENTRE

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Tribunal: David Demack (Chairman)

Sitting in public in London on 11 December 2008

Ian Hutton of counsel, instructed by the Solicitor and General Counsel for HM Revenue and Customs for the Respondents

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DECISION

Introduction

1. This appeal is concerned with the proper interpretation of Article 132.1 (b) and (c) of Council Directive 2006/112/EC of 28^th November 2006 on the common system of value added tax (‘the Principal VAT Directive’) and in particular whether the provision of services by Future Health Technologies Limited (“FHT”) consisting in or related to the collection, testing, processing and storage of umbilical cord blood stem cells for future therapeutic use may be exempted from VAT in whole or in part under one or other of those provisions.

2. The case for FHT was presented by Mr. Roger Thomas of counsel and that for the Commissioners for Her Majesty’s Revenue and Customs (“HMRC”) by Dr. Ian Hutton, also of counsel. They presented me with the following statement of facts and draft questions for a possible reference to the Court of Justice of the European Communities.

The facts

3. FHT is a UK private limited company incorporated on 3 May 2002 which was registered for VAT with effect from 1 August 2004. FHT is accredited by the Medicines and Healthcare products Regulatory Agency(an executive agency of the UK’s Department of Health) for the supply of Haemopoietic Progenitor Cells within the Department of Health’s accreditation scheme for tissue banks in the Public Sector; and is licensed by the Human Tissues Agency (the Competent Authority in the UK under the new EU Tissues and Cells Directives) as a Private Stem Cell Bank. As a result of the breadth of its accreditation and licensing, FHT is able to make the stored stem cells available both for the treatment of the child from whose cord blood the cells were extracted (autologous use) and for the treatment of other members of the family of the child, or indeed, other unconnected persons (allogeneic or heterologous use).

4. Stem cells for medical application are collected at birth. This is the time that the blood is richest in stem cells and these cells are of the highest quality. The cells processed and stored by FHT are for medical use only. They are not available for research or experimentation. The stem cells are extracted for the purpose of protection, maintenance and/or restoration of the health of the donor.

5. Stem cell transplant therapy has become a standard medical procedure in the treatment of various forms of leukaemia, blood disorders, anaemias and autoimmune conditions. Clinical trials and experimental treatments using stem cells have been conducted for multiple sclerosis, diabetes and organ repair. It is predicted that the uses of stem cells will increase in the future.

6. The dispute arises because HMRC have ruled that the services supplied by FHT under the terms of its contract with the parents of the child are to be treated as a single, composite, taxable supply of storage services. A copy of the contract (‘the Contract’) is to be found as Appendix 1 to this Statement of Facts. A copy of the decision letter is to be found as Appendix 2. A copy of the information pack made available to potential clients is included as Appendix 3.

Background

7. In each case the transactions which will or may occur in consequence of FHT agreeing to provide its services under the Contract are as follows:

1. A Cord Blood Collection Kit is sent to the parents of the unborn child;

2. The parents arrange (at their own expense) for a medical professional attending the birth to collect blood from the umbilical cord shortly after birth;

3. The blood is transported by medical courier to the FHT laboratory. This is a purpose-built facility near Nottingham for the analysis and extraction of stem cells from the cord blood;

4. Employees of FHT test the blood to ensure that it is not contaminated with any medical...