Private NHS providers in line for corporation tax exemption

Private companies providing NHS services could be exempt from paying corporation tax on their profits under proposals being considered by a government-commissioned review of competition in the health service, the Guardian has learned.

Monitor, the NHS's economic regulator, argues that as public sector hospitals do not pay corporation tax and VAT on supplies, whereas private firms do, the result is an "unfair playing field" in healthcare. The regulator was asked to look at the issues as part of a review into NHS competition, and will report to the health secretary, Jeremy Hunt, later this month.

Hunt's predecessor, Andrew Lansley, produced analysis which said "the majority of the quantifiable distortions work in favour of NHS organisations; tax, capital and pensions distortions result in a private sector acute provider facing costs about £14 higher for every £100 of cost relative to an NHS acute provide".

One source who has seen a draft of the final review said it is sympathetic to the private sector demands.

However, critics argue that it is ridiculous for companies to lobby to provide NHS services for profit and then to claim it was unfair to pay tax on their profits. Labour called on the government not to "let the tax avoiders into the NHS".

http://www.guardian.co.uk/society/2013/jan/13/private-firms-corporation-tax-nhs-profits

To level the field they should do the opposite and make the NHS subject to corporation tax,which would be nil, and subject to vat which would simply be reycycled tax.