NHS Lothian Health Board v The Commissioners for Her Majesty's Revenue & Customs, TC 05971
| Jurisdiction | UK Non-devolved |
| Judge | Peter SHEPPARD |
| Judgment Date | 26 June 2017 |
| Neutral Citation | [2017] UKFTT 0522 (TC) |
| Respondent | The Commissioners for Her Majesty's Revenue & Customs |
| Appellant | NHS Lothian Health Board |
| Reference | TC 05971 |
| Court | First-tier Tribunal (Tax Chamber) |
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[2017] UKFTT 0522 (TC)
TC05971
Appeal number: TC/2012/00192
VAT – Fleming claim – whether all supplies exempt or non-business, No.
Repayment of input tax attributable to taxable supplies made from 1974 to
1997 – whether quantifiable with sufficient precision – No. – FA 2008,
Section 121 – Appeal dismissed
FIRST-TIER TRIBUNAL
TAX CHAMBER
NHS LOTHIAN HEALTH BOARD Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S Respondents
REVENUE & CUSTOMS
TRIBUNAL:
MEMBER: PETER R SHEPPARD, FCIS, FCIB, CTA
Sitting in public at George House, 126 George Street, Edinburgh on 11 and 13
May, 16 and 17 June, 10-13 November 2015, and 21, 22 and 23 June 2016
David Southern, QC, instructed by Liaison Financial Services Limited, for the
Appellant
Sean Smith, QC, instructed by Douglas Pate, Solicitor, Office of the Advocate
General for Scotland, for the Respondents
© CROWN COPYRIGHT 2017
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DECISION
Introduction
1. The hearing of this appeal took place before Judge Kenneth Mure QC and Mr. 5 Peter Sheppard FCIS FCIB CTA. Judge Mure died suddenly and unexpectedly before
a decision could be released. This decision has been prepared by Mr. Sheppard, with
the agreement of the parties and by authority of the president of the Tax Chamber.”
2. This is a claim for repayment of input tax relating to taxable services supplied
by the appellant’s laboratories during the period 1974 to 1997. These were rendered 10 to private (non-NHS) customers such as local authorities, other public bodies, and
foods and drugs manufacturers.
The Law
3. In addition to the relevant statutory provisions, particularly FA 2008
Section 121, the Tribunal was referred extensively to many authorities, documents 15 and publications. Those which the Tribunal considered relevant are set out in a list
which is appended hereto as Appendix A. Section 121(1) provides:-
“(1) the requirement in section 80(4) of VATA 1994 that a claim under that
section be made within 3 years of the relevant date does not apply to a claim in
respect of an amount brought into account, or paid, for a prescribed accounting 20 period ending before 4 December 1996 if the claim is made before
1 April 2009.”
Evidence
4. In addition to settling an Agreed Statement of Facts both parties led extensive
witness evidence. On the first two days of the hearing the Tribunal heard brief 25 introductory evidence from the appellant’s witnesses who could speak to the pattern
of the laboratories’ activities at the material time, sources of income, and various
aspects of the accounting systems then in place. Each read out his or her Witness
Statement, was then asked any supplementary questions and thereafter cross-
examined. 30
5. Firstly Linda Mulhern gave evidence (vol 5, tab 7). She is the operational
science manager in microbiology. She has responsibility for the microbiology
laboratories of the appellant Health Board, attends at the new Royal Infirmary and St
John’s Hospital, and has responsibility for health and safety in the microbiology
laboratories. 35
6. She started work with the appellant in 1988 as a trainee bio-medical scientist.
She holds an honours degree in microbiology and a master’s degree too. She became
a senior bio-medical scientist in 1997.
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7. Mrs Mulhern explained that the appellant carried out work for external
agencies. Borders Council would send water samples for testing. Oysters, milk and
cream were also tested. Eggs were checked for salmonella. The laboratories were in
the hospital grounds. She remembered the food testing which was being carried out
when she started in 1988. It continued until at least 1996. 5
8. Medical care for patients included checking samples of body fluids and swabs.
The laboratories undertook general public health work too. The laboratories carried
out National External Quality Assessment Scheme (“NEQAS”) work. Also, the
laboratories conducted drugs research work, often at weekends and in the evening.
Mrs Mulhern considered that 70% of the laboratories’ work was for the NHS and the 10 balance for external, private work. Public health work, she said, reduced towards the
end of the 1990s.
9. Mrs Mulhern was not cross-examined. She confirmed to the Tribunal that she
was not registered as a medical practitioner.
10. Then Miss Gillian Fewster gave evidence (vol 5, tab 6). She is deputy health 15 and safety officer for microbiology and bio-medical scientist team manager. She is
involved also with diagnostic microbiology. She started working for the NHS in 1973
at the Western General Hospital. She became an advanced bio-medical scientist in
1993.
11. At the Western General Miss Fewster was involved in processing and reporting 20 on private samples, including work for public health departments of various local
authorities, examining water, milk, creams, swimming baths’ water, shell fish, certain
food samples and sewer swabs.
12. Miss Fewster had undertaken research and development work for a period, for
which she was paid additionally. Also she had tested cattle and poultry samples for 25 bacteria harmful to humans, including milk-testing. Her public health work ceased in
about 1993, then re-started for a period with another manager, until this work was
transferred to the City Analysis Laboratory in 2000.
13. Miss Fewster indicated that she was registered with the Health Care
Professional Council. 30
14. Next Miss Jane McIvor gave evidence (vol 5, tab 9). She is a bio-medical
scientist with the appellant, having started as a trainee in 1980. She explained that she
had been involved receiving, processing, and reporting on samples sent for testing, for
third parties for public health purposes. The tests were not medical but for
environmental purposes. Scottish Water now competes for this work. Miss McIvor 35 had also been involved in testing cream and dairy products for environmental health
purposes.
15. Miss McIvor explained that her “non-NHS work” took up about 1—1½ hours
per day. She indicated that she held an HNC and was registered with the Health Care
Professional Council. 40
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