[2013] UKFTT 598 (TC)
TC02985
Appeal number:
TC/2012/10261
VAT – Exemption
– Provision of services by private addiction therapist not registered or
enrolled on register or roll of health professionals included in paragraphs (a)
to (d) of Item 1 Group 7 of Schedule 9 Value Added Tax Act 1994 – Whether services
supplied are directly supervised by such a health professional – No – Appeal
dismissed
FIRST-TIER TRIBUNAL
TAX CHAMBER
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M J FENWICK
CONSULTANCY
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Appellant
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- and -
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THE
COMMISSIONERS FOR HER MAJESTY’S
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Respondents
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REVENUE &
CUSTOMS
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TRIBUNAL:
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JUDGE JOHN BROOKS
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HELEN MYERSCOUGH
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Sitting in public at 45 Bedford Square London WC1 on 11 October 2013
Mark Fenwick for the Appellant
Philip Rowe of HM Revenue and Customs,
for the Respondents
© CROWN COPYRIGHT
2013
DECISION
1.
Under s 31 of the Value Added Tax Act 1994 (“VATA”) a supply of goods or
services is an exempt supply, and therefore not subject to VAT, if it is of a
description specified in schedule 9 of the Act.
2.
Insofar as it applies to the present case, Item 1, Group 7 of schedule 9
VATA provides:
The supply of services consisting of the provision
of medical care by a person registered or enrolled in any of the following:
(a) the register of medical practitioners or the
register of medical practitioners with limited registration;
…
(c) the register kept under the Health and Social
Work Professions Order 2001
Note 2, Group 7 of schedule 9 provides:
Paragraphs (a) to (d) of Item 1 … include supplies
of services made by a person who is not registered or enrolled in any of the
registers or rolls specified in those paragraphs where the services are wholly
performed or directly supervised by a person who is so registered or enrolled.
3.
M J Fenwick Consultancy is a partnership which, from late 2002, has offered
medical services in terms of therapy for people with addictive disorders. The
partners are Mr Mark Fenwick, who is an addictions therapist, and Mrs Elizabeth
Fenwick, who is responsible the partnership’s administration.
4.
As Mr Fenwick is not registered or enrolled with any of the bodies specified
in Item 1, Group 7 of schedule 9 VATA, the partnership’s supplies, although
consisting of the provision of medical care, are subject to VAT. Accordingly it
has been registered for VAT since 1 December 2002.
5.
Clients are referred to Mr Fenwick by their General Practitioners
(“GPs”) or psychiatrists and he regularly liaises directly with the referrer on
the client’s care, maintenance and restoration in addition to their specific
medical needs. He described the process in his letter of 15 February 2013 to HM
Revenue and Customs (“HMRC”) as follows:
I work closely alongside medical professionals as
they refer the majority of patients to me. If necessary I will refer patients
back to the referring GP or psychiatrist to assess the patient medically. If my
patients approach me directly, I request the name of their doctor or GP and I
will liaise with them as a matter of professional courtesy. I also oversee
patients continued care should they have been referred on to hospital or
treatment centres.
6.
In 2000, to enable Mr Fenwick to retain his licence with the United
Kingdom Professional Certification Board of Alcohol and Drug Counsellors, it
was necessary for him to have weekly supervision meetings to discuss patient
cases and review the most appropriate therapeutic action for the patient. His
supervisor since that time has been Mr Richard Gill who is a member of the UK
Council for Psychotherapy and Jungian Analysis and a certified UK Council for
Psychotherapy Supervisor and Training Supervisor in the College of the Bowlby
Centre for Attachment based Psychoanalytic Psychotherapy. It is accepted that
Mr Gill, like Mr Fenwick, is not on the register or roll of any of the bodies
specified in Item 1, Group 7 of schedule 9 VATA.
7.
In addition, since 1996, Mr Fenwick has had a professional relationship
with Dr Richard Wolman M.B. Ch.,B a consultant psychiatrist with whom he
discusses client case loads and medical needs and who regularly refers clients
to him. Although not reduced to a written agreement, from 9 July 2012 Dr Wolman
“officially” agreed that he would have a “supervisory role” in this
professional relationship in which he and Mr Fenwick speak as often as the
circumstances require.
8.
As he had obtained Dr Wolman’s agreement to act in a supervisory role, on
7 July 2012 Mr Fenwick wrote to HMRC requesting that subsequent supplies of the
partnership be treated as they now fell within Note 2, part 7 of schedule 9
VATA. However, HMRC did not accept that this was the case.
9.
Following further correspondence HMRC undertook a review of their
decision and notified Mr Fenwick of the outcome of this review in a letter
dated 17 October 2012. This was to uphold the decision that not to grant the
partnership exemption from VAT registration on the grounds that it was not
accepted that the arrangement with Dr Wolman was “in the true sense of the
word, supervisory in nature.”
10.
On 9 November 2012 Mr Fenwick appealed to the Tribunal.
11.
The issue before us is whether Mr Fenwick is directly supervised by a
person who is so registered or enrolled on register or roll of health
professionals included in paragraphs (a) to (d) of Item 1 Group 7 of Schedule 9
VATA.
12.
Although “directly supervised” is not defined in the legislation it is
clear from the decisions of the VAT and Duties Tribunal (the predecessor of
this Tribunal in respect of VAT appeals) in Carragh Pittam v Customs and
Excise Commissioners (1995) Decision No. 13268 and Elder Home Care Ltd v
Customs and Excise Commissioners (1993) Decision No. 11185 that direct
supervision does not involve standing over the person at all times but is a
matter of fact and degree having regard to the circumstances of the case.
13.
In the Elder Home Care case the Tribunal held that it was
sufficient if the supervisor checked on the employee as often as necessary in
the circumstances with a system to enable the employee to contact the
supervisor as required. As such, and given their weekly supervision meetings, we
consider that Mr Fenwick is directly supervised by Mr Richard Gill.
14.
However, as Mr Gill is not registered or enrolled with any of the bodies
specified in Item 1, Group 7 of schedule 9 VATA this cannot bring the
partnership within the exemption and it is therefore necessary to consider the
relationship between Mr Fenwick and Dr Wolman and the GPs and psychiatrists who
clearly are registered or enrolled with the bodies to which the legislation
refers.
15.
Having heard from Mr Fenwick it seems to us that his relationship with
the GPs and psychiatrists who refer their patients to him is somewhat akin to
that of counsel and his or her instructing solicitor. In both cases, although
there are two professionals acting and working together in the best interests
of their mutual client, it cannot be said that one is under the direct
supervision of the other.
16.
We also consider that there is a similar relationship between Mr Fenwick
and Dr Wolman. Although Dr Wolman is available to Mr Fenwick to discuss client
caseloads and their medical needs, as often as the circumstances require,
whether or not the clients have been referred by him we are unable to find that
Mr Fenwick is acting under the direct supervision of Dr Wolman.
17.
As such the supplies made by the partnership cannot fall within Group 7
of schedule 9 VATA and it is not eligible for exemption from registration under
schedule 1 VATA.
18.
We therefore dismiss the appeal.
19.
This document contains full findings of fact and reasons for the
decision. Any party dissatisfied with this decision has a right to apply for
permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure
(First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be
received by this Tribunal not later than 56 days after this decision is sent to
that party. The parties are referred to “Guidance to accompany a Decision from
the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this
decision notice.
JOHN BROOKS
TRIBUNAL JUDGE
RELEASE DATE: 22 October 2013
