Ambulance bosses in Bristol have called on the government to pay the £500,000 in reclaimed VAT they claim they are owed.
Bristol Ambulance Emergency Medical Services says a "taxation technicality" means they cannot reclaim VAT they say is due to them from HM Revenue and Customs.
The independent ambulance service, which employs 320 people across the south west, says the funds are urgently needed as the coronavirus crisis has led to unprecedented demand and a lack of protective equipment for staff.
The company is responsible for NHS non-emergency patient transport delivery across all major hospitals in the region but is struggling to cover costs in the "extreme circumstances" caused by the pandemic.
Rob Johnson, director of operations for Bristol Ambulance EMS, said other companies in their sector offering "identical services" can reclaim VAT but they cannot.
He said: “Up until now, our business has run on very tight margins, which is what you would expect given that our customers are the NHS and the all-important public we serve.
"For the last four years, we have been battling with HMRC who have denied us crucial VAT recovery for resource strapped ambulance patient transport services.
“We have received unfair and inconsistent treatment because there are other companies in our sector offering identical services who are able to reclaim VAT.
"Those who will potentially lose out are the people in Bristol and the south west who depend on our crucial service.
"We know that it costs around £950 a day to keep someone in hospital and we allow for quick patient discharges, avoiding ‘bed blocking’."
He went on to say the Covid-19 pandemic was having a massive impact on the business 'in many different unforeseen ways' and that funding was needed more than ever.
"The supply chain for vital Personal Protective Equipment (PPE) for frontline patient-facing staff is in very short supply, with many of the usual contractors being forced to ‘ringfence’ stock for the core NHS supply chain," he said.
"When such equipment is available, it has rocketed in price and negotiation is impossible because of its essential role in protecting frontline crews.
"We urgently need to recover VAT to pay for ongoing fuel costs, outsourced staff, training and maintenance costs and equipment which can then be spent on providing a better service in these extreme circumstances."
HM Revenue and Customs said it was unable to comment on individual businesses but said patient transport in an ambulance is VAT exempt.
A spokesperson said: “The VAT treatment of patient transport services varies depending upon the type of vehicle required. Patient transport in an ambulance is VAT exempt.
“Transport provided in other vehicles is subject to 20 per cent VAT unless the vehicle carries 10 or more people (fewer if seats have been reduced to accommodate wheelchairs), in which case it is zero-rated for VAT.
“The government has announced measures to assist businesses that are facing financial hardship as a result of the crisis, including deferring VAT payments and other measures to assist cash flow.
"These are set out on GOV.UK”
