Supplies by Subcontractors

In the case of HMRC vs City Fresh Services, City Fresh Services was set-up by partners of a pre-existing dental practice in order to provide dental services and take over a contract with an NHS trust. HMRC argued that this was a supply of staff by the pre-existing dental practice to City Fresh Services as opposed to a supply of medical care and that supplies by City Fresh were therefore VATable as opposed to exempt.

The First-Tier Tribunal ruled in the favour of the Appellant on the basis that the fact that there is 2 suppliers in the chain does not affect the nature of the supply and that it is not necessary for medical care to be supplied directly to the final recipient of the dental care. HMRC's argument that a supply of staff was made was also rejected due to the working days of the two dentists involved being the same, independent of any input by the pre-existing dental practice. Supplies by City Fresh Services with therefore deemed to be exempt from VAT.

If you are involved in a supply of staff/services in the health/medical sector and wish to seek clarity on your VAT position, speak to one of our experienced consultants on our helpline.


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