NHS Trusts: Subsidiary Companies

Department of Health and Social Care written question – answered on 8th October 2019.

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Photo of Karin Smyth Karin Smyth Labour, Bristol South

To ask the Secretary of State for Health and Social Care, what discussions his Department has held with HM Treasury on reductions in VAT resulting from the establishment of wholly-owned subsidiary companies to deliver estates and property services for the NHS.

Photo of Karin Smyth Karin Smyth Labour, Bristol South

To ask the Secretary of State for Health and Social Care, what estimate the Government has made of the additional income NHS Trusts have received through changes in VAT treatment following the creation of wholly owned subsidiary companies to deliver estates and property services.

Photo of Edward Argar Edward Argar Minister of State (Department of Health and Social Care)

We can confirm that no such discussions have taken place. The Department wrote out to the finance directors of all National Health Service providers in September 2017 reminding them of their responsibilities around tax and advising that tax avoidance arrangements should not be entered into under any circumstances. We would expect all NHS providers to follow this guidance when considering any new arrangements or different ways of working. Given these safeguards which are in place around tax avoidance in the NHS, no discussions have taken place between the Department of Health and Social Care and HM Treasury.

We can confirm that no such estimate has been made. There are a number of reasons for a Trust to set up a subsidiary company, including:

- Employ staff on more flexible and in some cases more generous terms and conditions;

- Providing services for other trusts; and

- Being able to attract staff from the local employment market.

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