VQOTW: Medical Equipment

My client is in the business of helicopter charters but has taken on a contract to supply air ambulance services at motor-racing events. Their role will be to provide a crew that supplies first aid at the event with transport of injured persons to the hospital where appropriate.
As they are intending to make this a more frequent occurrence, they are purchasing medical equipment from an Austrian supplier to fit out the helicopter as an air ambulance, what are the VAT implications? What is the liability of the onward supply to the customer?

There are two areas to cover in this question one of the supplies received and the other of supplies made.

Supplies received:

Your client should provide his GB VAT number to the Austrian supplier, and then the supplier will not charge VAT on the supply of the equipment. Your client will be required to account for acquisition tax in Box 2 of his UK VAT return. (Notice 725 section 7 sets out the acquisition tax requirements.)

An acquisition in the UK occurs where:

  • There is an intra EU movement of goods to the UK
  • The goods are received by a VAT registered trader
  • The supplier is VAT registered in the member state of departure

Acquisition tax is only recoverable in full where the VAT relates to taxable supplies, or where any exempt input tax is within the partial exemption de-minimis limits (Notice 706 section 11).  If the goods will be put to wholly exempt use, the acquisition tax will not be recoverable in box 4, and if they will be put to both taxable and exempt use, the acquisition tax will be included as residual input tax in the client’s partial exemption calculations.

Supplies made:

First aid services on their own are standard rated, as are services where any transport would be provided by, for example, calling an NHS ambulance.  Where first aid services are provided with the transport of sick and injured, there is an exemption that can be applied but three conditions must be met – VATHLT5030 sets these conditions out along with the nature of adaptations HMRC accept as sufficiently significant to make the vehicle or aircraft  ‘specially designed’

  1. The passenger transported must be sick or injured
  2. The transport must form part of the journey to or from a place of medical treatment
  3. The vehicle which the person is transported must be specially designed for the purpose of providing such transport

Therefore, if your client’s contract is for first aid services, together with transport of sick or injured persons to a hospital (or waiting for road ambulance) where necessary, and the helicopter has been specially adapted into an air ambulance, then the supply is exempt.

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Arti has worked in VAT since 2004 spending 11 years with HMRC. During her time in the department she was a visiting officer, a business records check officer providing educational visits and spent the last three years on the Alcohol Fraud team where she gained a good understanding of civil penalties and appeals. In addition she was an IT specialist providing support to colleagues and an associate trainer delivering VAT and Penalties training.

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