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A firm of solicitors, Barratt Goff and Tomlinson, appealed against HMRC’s review of VAT disbursements concerning medical records and medico-legal reports.
The Revenue held that fees charged by medical professionals for providing such reports for litigation purposes were a supply of legal services and subject to VAT. The department issued assessments accordingly.
Fees paid for the provision of medical records to a solicitor by a health authority or another person, if a disbursement, are outside the scope of VAT. The claimants argued the records were provided under the Data Protection Act 1998 and therefore the relevant fees would not be subject to VAT.
Guided by the European Court of Justice case of De Danske Bilimporter (Case C-98/05), the tribunal said that, in that decision, ‘the decisive test for including a duty in the value of goods supplied is whether the supplier paid the duty in his own name and on his own account. If this is the case the consideration relevant for determining the taxable amount includes the corresponding amount of duty’.
Applying this to the instant case, the tribunal noted that ‘the fact that the invoice raised by whoever makes supplies to Barratts records on it the name of Barratts’ client… is sufficient to satisfy the “in his own name” requirement’.
With regard to the ‘on his own account’ condition, the tribunal this was satisfied if the service is provided by Barratts as agents for and on behalf of the client, which it was content was the case.
The claimants’ appeal was allowed.
It should be noted that the question of whether such expenditure is liable to VAT has diminished in importance since 2007, as a result of an amendment to VATA 1994, Sch 9 Group 7 Item 1(a). This provided that only services ‘consisting in the provision of medical care’ were to be exempt from VAT.
Consequently, most experts providing reports are now VAT-registered, meaning that the cost of their reports will be subject to VAT.
