- VAT exemption for welfare services has traditionally applied to charities.
- Welfare services include care, treatment, or instruction for vulnerable individuals.
- Initially, only charities could benefit from the VAT exemption.
- Some providers used non-charitable subsidiaries to recover VAT on expenses.
- This allowed them to charge VAT to Local Authorities, who could recover it.
- HMRC changed the law to extend the exemption to state-regulated private welfare institutions.
- An avoidance scheme involved using a VAT grouped subsidiary not regulated by CQC.
- HMRC will now challenge these schemes by rejecting new Group registrations.
- They will also seek to remove relevant subsidiaries from existing group registrations.
Source: haysmac.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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