VAT on Air Ambulance Fuel Payments

Part of United Kingdom Borders – in the House of Commons at 5:03 pm on 11th July 2012.

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Photo of Tracey Crouch Tracey Crouch Conservative, Chatham and Aylesford 5:03 pm, 11th July 2012

I completely agree. The Kent, Surrey and Sussex air ambulance has two helicopters to serve the three counties. I am sure that all money saved from VAT would be used effectively.

One great thing about the Kent, Surrey and Sussex air ambulance is that it transports a specialist doctor and a critical care paramedic directly to the scene of serious medical emergencies. They provide enhanced care at the scene of the accident, often involving medical procedures usually provided only in the emergency department of a hospital. Patients are flown to the most appropriate hospital for their needs, and many are transferred to county or regional hospitals. However, as the three shouts I described show, patients quite often require specialist treatment at a major trauma centre in London. Quite simply, the intervention of the air ambulance team saves lives.

The Kent, Surrey and Sussex air ambulance costs £5 million per year to fund and operates 365 days a year, responding to 1,500 to 1,800 medical emergencies per annum. It is funded almost entirely by donations.

Its mission, objective and outcomes are as important to our country as those of the Royal National Lifeboat Institution, another lifesaving service very dear to my heart. However, as we have heard, and as the motion states, the key difference between the two is that the Kent air ambulance pays VAT at the rate of 20% at its base in Marden. It buys fuel in bulk and uses between 180,000 and 200,000 litres a year. Given that each mission costs around £2,500, zero-rating fuel for the helicopters would save the air ambulance a significant amount of money that it could reinvest in its lifesaving functions. That is not a vast amount of money for the Treasury, but it would be directly available to air ambulances.

It has already been made clear that, under EU law, it is not possible to implement a new zero-rating into UK legislation relating solely to the air ambulance. Although I am not a VAT expert, let me offer the Minister a possible solution. Schedule 8 to the Value Added Tax Act 1994 refers to charities and outlines provisions that allow for the supply, at the zero rate of VAT,

“of any relevant goods to an eligible body which pays for them with funds provided by a charity”.

The Act also makes it clear that “relevant goods” includes “ambulances” and

“parts or accessories for use in or with” ambulances. Her Majesty’s Revenue and Customs already accepts that “ambulances” includes specially equipped air ambulances or watercraft, and that “eligible bodies” includes charitable institutions providing

“rescue or first aid services”.

Under those provisions, therefore, and with guidance from the Treasury and HMRC, the air ambulance could purchase fuel in its own name for use at a zero rate of VAT. I am sure that, with proper discussion, air ambulance charities could certify the use of the fuel, making them liable for VAT payments if they misappropriate it for other purposes. Furthermore, I am sure the charities would be willing to appease any concerns that HMRC might have on claims for retrospective recovery of VAT incurred over the past four years, which would obviously lead to a greater cost to the Treasury.

The Treasury might be concerned about the reduction of revenue, but it should recognise how much the air ambulance saves the NHS. First, like others, the Kent air ambulance is not funded by the ambulance service or the NHS. Secondly, the speed at which it can transfer injured persons to hospital often means that they are treated and discharged more quickly, thereby saving the NHS money in the long term.

Throughout the debate thus far, Members have spoken highly of the air ambulances serving their constituents. There can be no doubt about the level of genuine support they enjoy, but as the motion makes clear, and as we have heard, there is potential for the Treasury to give additional financial support to help air ambulances up and down the country to carry on providing a vital service. It is for this reason that I urge the Treasury to review the current VAT arrangements and use this opportunity to recognise further the vital contribution that the air ambulance service makes to people’s lives.