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NHS Ayrshire & Arran Health Board v HMRC

Secure mental health unit for children did not qualify for zero-rating

In NHS Ayrshire & Arran Health Board v HMRC [2025] UKFTT 502 (TC) (1 May) the FTT found that the construction of a secure mental health unit for children did not qualify for zero-rating as it was classified as part of a ‘hospital or similar institution’.

The appellant sought non-statutory clearance that zero-rating applied to the construction services and materials used in the construction of a ‘bedroom wing’ for a National Secure Adolescent Inpatient Service (NSAIS) (a secure mental health unit) in the grounds of a hospital.

The relevant provisions of the law are VATA 1994 Sch 8 Group 5 item 2(a) notes (4) and (10). This allows for the zero-rating of services and materials used in constructing a building to be used for a ‘relevant residential purpose’; however  crucially ‘hospitals and similar institutions’...

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