- HMRC released a brief to end VAT charges on care services that would be VAT exempt.
- This affects care providers using unregulated subsidiaries to charge VAT.
- Previously, VAT welfare structures allowed VAT recovery on costs.
- HMRC now views this as VAT avoidance and will prevent its use.
- No change in VAT legislation prompted this announcement.
- Impact depends on individual circumstances and may be challenged.
- Organizations using this structure risk losing VAT recovery benefits.
- HMRC will review and potentially remove subsidiaries from VAT groups.
- New VAT group applications under this structure may be rejected.
- Organizations should reconsider using this structure and prepare for changes.
- Notify HMRC if using the structure and budget for reduced VAT recovery.
- Evaluate if the structure constitutes VAT avoidance.
Source: crowe.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.
