1st Alternative Medical Staffing Ltd v The Commissioners for HMRC

An appeal from the First-tier Tribunal lies only on a point of law. Permission requires a realistic prospect of showing a material error. For the closely related supply exemption in Item 4 of Group 7, Schedule 9 to the Value Added Tax Act 1994, an employment business’s exemption from CQC registration does not itself make it a state-regulated institution. The supplier must also meet the requirement, read consistently with Article 132(1)(b) of the Principal VAT Directive, of being a duly recognised establishment similar to a hospital or medical treatment centre. An appellate court will generally refuse a new point that could and should have been raised before the tribunal that heard the evidence, particularly where it would require new evidence or change how the evidence was tried.

The Applicant supplied nurses and care assistants to NHS and private hospitals and care homes. HMRC issued VAT assessments on those supplies. The First-tier Tribunal (Tax Chamber) dismissed the Applicant’s appeal, finding that it was not a state-regulated institution for the purposes of Item 4 of Group 7, Schedule 9 to the Value Added Tax Act 1994. The FTT also gave alternative reasons why the supplies would not qualify as closely related supplies.

After the FTT refused permission to appeal, the Upper Tribunal refused permission on the papers. At the oral reconsideration, the Applicant argued that its activities had been exempted from CQC registration and that the FTT had failed to determine whether this made it a state-regulated institution under Note 8. The central question was whether that ground disclosed an arguable, material error of law.

1. Permission test. Under section 11 of the Tribunals, Courts and Enforcement Act 2007, an appeal from the FTT lies only on a point of law. Permission requires an arguable error of law that was material to the FTT’s decision. An argument is arguable only if it has a realistic, rather than fanciful, prospect of success. The renewed ground did not meet that standard.
2. Registration exception. The Tribunal accepted that Note 8 includes institutions exempted from registration under the specified statutory arrangements. But the exception from CQC registration for an employment business supplying nurses did not, without more, make that business a state-regulated institution. The similar argument in Slide & Seek Ltd v HMRC [2014] UKFTT 512 (TCC) had been rejected, even though the registration provisions in that case expressly described the relevant exclusions as exemptions.
3. Requirement under the VAT exemption. Even if the Applicant’s interpretation of Note 8 were arguable, Item 4 had to be construed strictly and in conformity with Article 132(1)(b) of the Principal VAT Directive. The Applicant also had to be a duly recognised establishment similar to a hospital or medical treatment centre. The absence of a CQC registration requirement could not sensibly establish that status for an employment agency.
4. New point on appeal. The proposed exemption-from-registration argument had not been raised before the FTT and was inconsistent with the case advanced there. Applying the principles set out in Notting Hill Finance Limited v Sheikh [2019] EWCA Civ 1337, including the statements in Pittalis v Grant [1989] QB 605, Ex parte Firth, In re Cowburn (1882) 19 Ch.D. 419 and Singh v Dass [2019] EWCA Civ 360, the Tribunal held that the new ground could and should have been raised below. Permission was also refused for that reason. The Applicant’s status as a litigant in person did not displace ordinary procedural fairness.
5. Additional observation and order. The judge was not persuaded that an error on the first condition would have been material, given the FTT’s unchallenged alternative reasons on the closely related supply condition and Article 134 of the Directive. The judge expressly did not rely on that point. The previous grounds were not renewed and, on reconsideration, did not disclose an arguable error of law. Permission to appeal was refused.

1. Upper Tribunal (Tax and Chancery Chamber): following an oral hearing to reconsider its paper refusal of permission dated 16 March 2026, the Tribunal refused permission to appeal on 2 July 2026. [2026] UKUT 248 (TCC)
2. First-tier Tribunal (Tax Chamber): dismissed the VAT appeal in its decision released on 7 November 2025 and refused permission to appeal on 5 February 2026. No citation for the FTT decision is stated in the judgment.