§ Dawn Primarolo
The business activities of hospitals are governed by the same VAT rules as those for other organisations. Private care provided by all hospitals is exempt from VAT, which means that hospitals cannot recover any VAT associated with those supplies. However, when providing free health care, the funding NHS hospitals receive from the Department of Health takes account of VAT. In addition, when NHS Trusts contract out services to the private sector, the tax they incur can in most instances be reclaimed.