• HMRC to appeal against court’s ruling to let NHS trust reclaim £14m of VAT
  • Trust “disappointed” with HMRC’s decision 
  • Final judgment may not be made until 2021 

An NHS trust faces delay of around a year before it can bank a £14m windfall after the government decided to appeal a High Court judgment.

HM Revenue and Customs has secured permission to appeal a decision in June by the upper tribunal (Tax and Chancery Chamber) to allow Northumbria Healthcare Foundation Trust to reclaim £14m of VAT in relation to its in-house transport service.

The acute and community trust, which is led by former NHS Improvement chief executive Sir Jim Mackey, successfully argued it was entitled to the VAT refund over payments associated with NHS Fleet Solutions – a car lease scheme which enables public sector staff to give up part of their salary in exchange for a car.

The Court of Appeal hearing is expected to take place within nine to 12 months.

The court will then spend up to six months considering its verdict.

This means the trust, if the appeal is quashed, may not receive the reclaimed VAT until early 2021.

A trust spokesman said HMRC’s appeal was “disappointing, but not unexpected”.

“We intend to robustly defend our case and the established judgment,” he added.

HSJ asked if the trust would repay all the money to public sector staff or the organisations that have used the service, should the appeal fail, but the spokesman said he was unable to comment further until the “legal process has concluded in full”.

In a letter from NHS Fleet Solutions to its customers, seen by HSJ, the entity said it would not be “calculating sums to be redistributed” until a “successful decision is obtained at the Court of Appeal”.

In the letter, Jason Coleman, national account manager for the service, said NHS Fleet Solutions continues to submit reclaim requests to HMRC for VAT incurred.

The £534m-income trust has run NHS Fleet Solutions since 2005, and the VAT claims in question relate to payments between 2012 and 2017.