Significant taxpayer win on single vs multiple supplies for VAT purposes

25 March 2023
A recent tribunal decision may enable businesses to reclaim more VAT where goods are supplied with a service as part of a single supply of that service. Single and multiple supply issues are never straightforward and can involve significant VAT risk.


For many years, NHS trusts have contracted out certain services to the private sector. The rules on how much input VAT they are allowed to reclaim on these services, and the goods that are often included as part of those arrangements, are complex and sometimes ambiguous. In a recent judicial review before the Upper Tribunal (UT), Gloucestershire Hospitals NHS Foundation Trust succeeded in establishing that the VAT on expensive artificial joints and other surgical prostheses can be reclaimed as part of a single supply of a contracted-out operating theatre management service.


While, at first glance, this case may appear to be restricted to a very specific area of activity, it may be especially interesting for other organisations, as it has shown that goods supplied as part of an overall service can still form part of that single supply, even if they make up a large proportion of the total value of the supply. In this case, around 70% of the contract value was for goods, including items where legal title was found to have passed to the NHS trust. Many NHS trusts have, until now, treated these supplies of goods separately to the related service and, as a result, have lost the opportunity to reclaim the input VAT incurred on them. The UT found that the value of the goods relative to the value of the overall supply was irrelevant; and it also didn’t matter that the nature of the arrangement between the supplier and customer was motivated by a desire to maximise VAT recovery.


NHS trusts should review their contractual arrangements for such supplies to ascertain if they are due a repayment of VAT. Other businesses dealing with single and multiple supplies may well benefit from a review of how the findings of this case could change their position. For example, could VAT exempt services purchased with related goods all be treated as exempt?

Whether making or receiving supplies, the VAT position where there is more than one element is rarely cut and dried. Businesses should look to ensure they are treating supplies in as beneficial a way as possible while remaining compliant with the established case law.

For more information, please get in touch with Scott Harwood or your usual RSM contact.