Judgment summary
This is a decision of the Upper Tribunal (Tax and Chancery Chamber), following an oral hearing, reconsidering an application by 1st Alternative Medical Staffing Ltd for permission to appeal against a First-tier Tribunal (FTT) decision released on 7 November 2025.
The FTT had dismissed the Applicant's appeal against VAT assessments concerning supplies of nurses and care assistants to NHS and private hospitals and care homes, on the basis that the Applicant did not satisfy the requirement of being a 'state-regulated institution' within Note 8 to Group 7, Schedule 9 VATA.
The FTT had refused permission to appeal on 5 February 2026, and Judge Thomas Scott had refused permission on the papers on 16 March 2026. The Applicant then requested an oral hearing to reconsider that refusal, and the grounds advanced changed repeatedly throughout the process.
Background
The appeal to the FTT concerned VAT assessments issued to the Applicant in respect of its supply of nurses and care assistants to NHS and private hospitals and care homes (para 5).
The Applicant initially argued that the supplies were exempt under Group 7, Schedule 9 VATA, that it could rely on Notice 701/57 (the Nursing Agencies Concession), and that it had a legitimate expectation of exempt treatment. A parallel judicial review claim on legitimate expectation was unsuccessful, including on appeal to the Court of Appeal (para 5).
At the FTT's direction, the Applicant filed amended grounds of appeal limited to the argument that the supplies were exempt under Item 4, Group 7, interpreted consistently with Article 132(1)(b) of the Principal VAT Directive (PVD), on the basis that they were 'closely related' to medical care and that the Applicant was a 'state-regulated institution' (para 6).
The parties were largely agreed on the applicable law, including that the Applicant needed to show it was a 'duly recognised establishment' or 'state-regulated institution' under Note 8, and that its supply of staff was closely related to exempt medical care (para 8).
Agreed facts included that the Applicant was an employment business supplying staff to client hospitals and care homes, that it had been registered with the Care Quality Commission (CQC) but ceased to be so registered in 2010, and that qualified medical staff it supplied provided care under the direction and control of its clients (para 9).
Core dispute
The FTT found that the Applicant did not meet the requirements of Note 8 to Group 7, Schedule 9 VATA, because it was not licensed, approved, registered or otherwise regulated under any Act of Parliament, notwithstanding that it was indirectly subject to requirements imposed on its regulated clients (paras 10 to 12, 27 to 29).
On the renewed application for permission to appeal, the Applicant, represented by Mr Odong, put forward a new ground: that Note 8 refers not only to institutions that are registered but also to those 'exempted from registration', and that the FTT had failed to consider whether the Applicant fell within that category following the Health and Social Care Act 2008 reforms (paras 16 to 17).
The Applicant argued that, from 2010, nursing agencies such as itself were exempt from registration under the Health and Social Care Act 2008 (Regulated Activities) Regulations 2014, and that the FTT had erroneously treated the absence of CQC registration as determinative without considering this point (paras 17, 19 to 20).
Court findings
The Upper Tribunal held that the phrase 'exempted from registration' in Note 8 did not mean that an employment agency such as the Applicant, whose supply of nursing staff to a CQC-regulated service provider did not itself require registration under paragraph 13 of Schedule 1 to the 2014 Regulations, thereby became a 'state-regulated institution' (paras 19 to 21). The Tribunal referred to Slide & Seek Ltd v HMRC [2014] UKFTT 512 (TCC), where a similar argument had been rejected in relation to Item 9 of Group 7 (para 21).
The Tribunal further held that, even if the Applicant were correct on this point, it was not arguable that this would result in the Applicant satisfying Article 132(1)(b) PVD as a 'duly recognised establishment of a similar nature' to a hospital or medical treatment centre (para 22).
The Tribunal also found that this argument had not been raised before the FTT and was inconsistent with the case the Applicant had run there, applying the principles on new points on appeal set out in Notting Hill Finance Limited v Sheikh [2019] EWCA Civ 1337 and the authorities cited within it, including Pittalis v Grant and Singh v Dass (paras 24 to 26).
The Tribunal noted, without relying on the point, that even if the ground had succeeded it would not have been material, because the FTT had also found, in the alternative, that the Applicant's supplies would have failed the separate requirement of being 'closely related' to medical care without breaching Article 134 PVD, a finding not challenged by the renewed ground (para 27, referring to paras 30 to 44 of the FTT decision).
The Tribunal commented on the 'extraordinary' and repeated changes to the Applicant's grounds of appeal throughout the proceedings, describing the process as resembling 'an extended game of whack-a-mole', while taking into account that Mr Odong was effectively a litigant in person (paras 14 to 15).
Outcome
Permission to appeal was refused. The Upper Tribunal found that the ground of appeal pursued at the oral renewal hearing did not identify any material, arguable error of law, and confirmed its earlier refusal of permission in respect of the grounds previously advanced (paras 18, 28 to 29).
Major issues / areas of contention
- Whether the FTT erred in law by treating the absence of direct CQC registration as determinative of whether the Applicant was a 'state-regulated institution' under Note 8 to Group 7, Schedule 9 VATA.
- Whether the phrase 'exempted from registration' in Note 8 encompassed the Applicant by virtue of the Health and Social Care Act 2008 (Regulated Activities) Regulations 2014, Schedule 1 paragraph 13.
- Whether this argument, raised for the first time at the oral renewal hearing, constituted an impermissible new point on appeal not raised before the FTT.
- Whether, even if the Applicant were 'state-regulated', it would satisfy the requirement under Article 132(1)(b) PVD of being a 'duly recognised establishment of a similar nature' to a hospital.
- Whether the ground of appeal was material given the FTT's alternative finding that the Applicant's supplies would in any event have failed the separate 'closely related' requirement under Article 134 PVD.
- The repeated and materially inconsistent changes to the grounds of appeal advanced by the Applicant throughout the FTT and Upper Tribunal proceedings.