The Department of Health has drafted in KPMG to assess the tax implications of setting up the government-owned company due to inherit NHS property assets with an estimated value of £5bn, amid fears it faces higher bills.
Consultants are understood to be preparing a report for the DH to clarify what taxes NHS Property Services Ltd could be liable for that an NHS body would not have to pay, how much it would have to pay, and what actions can be taken to minimise costs.
NHS Property Services was established late last year to act as a landlord and management agency for properties currently owned by primary care trusts and strategic health authorities.
The tax issue adds another layer of complexity to the due diligence process around setting up the company. PCTs and SHAs are currently conducting a comprehensive audit of their property portfolios and all contracts related to them,
One of the biggest bills the company could face is around stamp duty land tax, which would be incurred on 1 April when, as planned, properties transfer to the company.
The potential liability is not known, but as the minimum rate of stamp duty land tax is 1 per cent, it is likely to be tens of millions of pounds.
The company could also have to pay corporation tax on any profits it makes, and VAT on contracting work, such as maintenance or refurbishment charged to tenants or leaseholders.
NHS bodies are exempt from these charges. Any tax payable would effectively be a claw back by the Treasury on the NHS budget, as the company’s revenue will be drawn from rental income from clinical commissioning groups, GP practices and NHS providers, particularly in the community sector.
However, lawyers believe the health secretary could be forced to exempt the company from the requirement to pay tax through the use of secondary legislation, such as statutory instruments.
Hilary Blackwell, a partner at Capsticks specialising in property law, said drafting in KPMG was “sensible, if not something they should have done a while ago”.
Hempsons partner Graham Lea, added: “The tax issue is not insurmountable – but I imagine the KPMG work will throw up tax issues no-one has ever even thought of.”
KPMG confirmed it was assessing the tax liabilities around setting up the company, but declined to comment due to client confidentiality.