Private ambulance service in Milton Keynes battles to claim £485,000 refund from HMRC

Acute Ambulance and Medical Services, based on Kiln Farm, has been providing essential patient transport to people all over Buckinghamshire, Oxfordshire and Berkshire for the past 12 years.

Owners Christina and Kieren Gibson say they are being prevented from taking on new assignments, giving pay increases to their staff and investing in new ambulances until the refund comes.

And since the coronavirus pandemic, their situation has become worse than ever.

Christina said: "We and our workforce are dedicated to supporting patients while they travel from home to hospitals and care homes. We were just about breaking even before the Covid-19 crisis and since then, we’ve had to provide six sets of medical-quality personal protective equipment every day to each one of our 30 staff.

"We are having to transport one patient at a time due to social distancing and this has added to the number of journeys and increased fuel costs. In addition, we are having to absorb the cost of cleaning each vehicle after each journey, which is of course a necessity.”

The service typically transports patients to and from hospital and frequently travels throughout the UK. Recently they completed a 600-mile round trip to Cornwall and another to Scotland and back. Most journeys involve a crew of two who can both drive and support patients.

The HMRC refund stems from a dispute about whether or not the service should pay full VAT.

No private ambulance service charges VAT to their clients but some of the firms operating in the sector are exempt from VAT, meaning that they cannot reclaim VAT on bought-in costs, such as vehicles, motor repairs and fuel. Others offering the same services are zero rated and can claim back, giving them a 20 per cent cost-saving advantage.

Acute Ambulance and Medical Services has been seeking a zero VAT rating for several years. The HMRC decision is thought to be based on a ‘notional’ seating capacity for vehicles, so an HMRC inspector visited the firm’s premises in Burners Lane a year ago to see their ambulances.

But far from the expected refund, the firm says it last month received a completely unexpected tax bill for £16,500.

Christina said: “Having worked so diligently, providing transport services to patients under the extreme pressure of the coronavirus crisis, motivating our brilliant employees and keeping everyone safe, it’s a real ‘kick in the teeth’. This action is callous and unjustified at a time when HMRC is helping so many other companies. We need to focus on the task at hand which is carefully moving patients and keeping them well.”

Phil Luty, a taxation partner at Dains Accountants, is representing Acute Ambulance and Medical Services and recently established the Patient Transport Action Group to campaign for fair treatment by HMRC for those firms who are not yet zero rated.

He said, “Many companies in the patient transport sector were struggling before the coronavirus pandemic but many have reached crisis point. This is not an issue about job retention or loans, it’s about cash rightly owed to the service providers which is being denied by HMRC. I’m working closely with Christina and Kieren Gibson to resolve this matter as soon as possible. It’s a completely unfair situation and puts their crucial service at risk during these extremely difficult times for social care providers.”

An HMRC spokesman told the Citizen: “Where mistakes are made in relation to VAT, HMRC issues assessments to correct the mistake. This is also the case where government departments and NHS bodies make mistakes and over claim VAT under a special refund scheme they are entitled to use. In this way, all bodies are treated equally.

“In this dispute before the Upper Tribunal, the appellant contended that HMRC has no statutory power to assess for VAT overclaimed under the special refund scheme. We are pleased that the Upper Tribunal has upheld HMRC’s policy of assessing to recover amounts overclaimed.”

There are approximately 200 private ambulance services throughout the UK and the Patient Transport Action Group represents 15 of them, who claim they are collectively owed around £30 million.

The Independent Ambulance Association has also reached out to HMRC to find a resolution on VAT liability for non-emergency patient transport vehicles.