18812
Exemption – Health – Supplies of bio-chemical analysis – Supplies not performed or supervised by person on medical register or register under Professions Supplementary to Medicine Act 1960 – VATA 1994 Sch 9, Grp 7, item 1, note (2) – EEC 6th Dir Art 13(A)(1)(c) – Appeal dismissed

LONDON TRIBUNAL CENTRE

	NEUROTECH INTERNATIONAL LTD	Appellant

-	and –

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	THEODORE WALLACE   (Chairman)
PROFESSOR ROY SPECTOR MD PhD FRCP FRCPath

Sitting in public in London on 1 October 2004

D N Taylor, director, for the Appellant 

Miss Nicola Shaw, counsel, instructed by the Solicitor for the Customs and Excise for the Respondents

© CROWN COPYRIGHT 2004

DECISION

1.	This was an appeal against assessments totalling £32,320 with default interest covering the eight periods from 1 December 1999 to 28 February 2002.  The assessments were notified on 5 June 2002 following a visit by Mr H Kerntiff on 9 January 2002 and were based on output tax.

2.	The Appellant’s business consists of supplying bio-chemical analysis by way of testing blood and urine.

3.	The Appellant registered for VAT in February 1998.  Mr Taylor told us that before registering he visited Poole VAT Office and was told that diagnostic tests do not attract VAT but that they should register because some activities might be covered.

4.	The Appellant submitted VAT returns on the basis that no output tax was due but that input was recoverable.

5. 	Customs were concerned that the supplies were being incorrectly zero-rated.  A visit was therefore arranged.

6.	Mr Kerntiff recorded in his visit report that Mr Taylor told him that his wife, Dr Galtina, who was the other director, discovered a testing procedure for diagnosing certain types of cancer and conditions which predispose to cancer while working in her homeland the former USSR.  On moving to the UK she and Mr Taylor decided to set up a business providing this diagnostic service to registered doctors in respect of cancer diagnosis and to other bodies and individuals in cases of other conditions with a cause similar to cancer.

7.	The officer was told that the technicians were all graduates with degrees but were not registered under a statutory register and were not supervised by someone who was registered under the Professions Supplementary to Medicine Act 1960.

8.	Mr Taylor told the Tribunal that although his wife was not registered at the time she was entitled to be registered and had become registered since.  He told us that she tried to register in 1999 but was unable to do some because the Home Office had lost her Russian passport which she needed to register.  She had been granted UK citizenship in January 2002 and had then registered.

9.	Miss Shaw provided a most useful skeleton argument in advance of the hearing.

10.	There is no provision for zero-rating services of the type supplied by the Appellant.

11.	Supplies by a person registered on the medical register or a register kept under the Professions Supplementary to Medicine Act 1960 or wholly performed or supervised by a person on such a register are exempt under item 1 of Group 7 to Schedule 9 of the VAT 1994 and Note (2) to Group 7.

12.	The Professions Supplementary to Medicines Act 1960 applies to medical laboratory technicians among other professions.

13.	The UK legislation is derived from Article 13(A)(1)(c) of the EEC Sixth Directive which provides for exemption of:

“(c) the provision of medical care in the exercise of the medical and paramedical professions as defined by the Member State concerned.” 

The UK has defined those professions by reference to statutory registers and rolls and is entitled to do so, see Barkworth v Customs and Excise Commissioners [1988] STC 771.

14.	Mr Taylor accepted that his wife was not registered at the time but said that she was entitled to be registered and the only reason she was not registered was the loss of her passport.

15.	He also said that he had been misdirected by Customs when originally registering.  He accepted however that the tax assessed was due as a matter of law.

Conclusions
16.	The Tribunal has no jurisdiction to consider the misdirection alleged by the Appellant.  We heard no evidence as to what actually passed at the meeting before registration and express no opinion on the allegation.

17.	The Appellant is of course entitled to complain to the Ombudsman, the Adjudicator or to a more senior level of Customs than the local office.  Miss Shaw undertook to ensure that Mr Taylor was given details of how to make a complaint.

18.	The Act makes no provision for exemption of supplies when a person is entitled to be registered and has tried without success to register.  The loss of Dr Galkina’s passport was not of course the responsibility of Customs and it does not appear that Customs knew of her earlier attempt to register.  The fact is that the supplies by the Appellant did not fall within the exemption and were therefore subject to VAT at the standard rate.

19.	The appeal must be dismissed.

THEODORE WALLACE
CHAIRMAN

RELEASED: 21 October 2004

LON/2002/906