New NHS supply chain model – greater transparency on VAT

13 August 2018

A new procurement model replaces the NHS Supply Chain contract, held by DHL Supply Chain, in October. DHSC advise that the new model aims to help the NHS deliver annual savings of up to £600m by 2023.  Supply Chain Coordination Ltd (SCCL) is a subsidiary company of DHSC and will be separately VAT registered.

The current supply chain body is a division of NHS Business Services Authority and as such sits within the English NHS VAT division. VAT is not shown on their invoices other than on VAT acceptable documentation for certain COS recoverable services and latterly for confectionery products.  As SCCL sits outside the English VAT divisional registration, all its taxable supplies will be supported by VAT invoices. DHSC hopes that this greater transparency on VAT will make recoverable VAT easier to identify and thus indirectly result in VAT savings. However, it is important to note that the same VAT recovery rules continue to apply. VAT can only be reclaimed on services falling within the COS recovery rules or on goods and services that are directly attributable to taxable business activities.