Care Home - Vat

Care Home - Vat

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Hi,

Care home client has been approached by VAT specialist from large accountancy firm with a scheme or arrangement that will enable them to recover input VAT.

Thats all I know at this stage.

Anyone heard of anything similar?

Thanks

Replies (11)

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By spidersong
27th Oct 2010 15:08

Kingscrest

Google Kingscrest and VAT, or look the Kingscrest case up on BAILII.org.

It basically says that until 2002 supplies of care that didn't involve nursing could actually be standard rated by care home owners. If the home wasn't registered under a toothbrush scheme during this period, it is therefore possible for it to register for VAT between 1993 and, IIRC, 20th March 2002 (the 1993 date is when residential care responsibilities fell on Local Authorities rather than one of the central govt. departments).

It then charges Local Authorities VAT on Local Authority funded beds, the full VAT on the cost, even where there were private contributions, this then allows it to recover the Input Tax on the cost of providing those beds. The Local Authority is in a position to recover the VAT charged so doesn't lose out. If all clients are private then of course this wont be a go-er for the home.

The home has all the input tax back, which in most cases it will divvy up between itself, with a goodly proportion to the professional adviser doing the work, and also a kickback to the Local Authority for agreeing to a) pay the invoice which it has no actual liability to do, and b) verifying the details required to prepare the invoice, or indeed providing additional information that helps increase the claim.

To be honest I'm surprised there are any care homes left that haven't already been contacted, as this has been running for quite a few years now.

The above is over simplified and direct from memory rather than looking at my notes of the schemes, so the ruling given to Kingscrest and sorting out the recharges is a little more complex than my comments may lead you to believe, but there are quite a number of accountants who are involved with these claims, and it doesn't really take a specialist firm to do it.

However they may want to move quickly whatever they choose as there have been rumblings that HMRC are trying to find ways to close off the scheme, and are delaying (beyond their normal delays) registrations of care homes in these circumstances.

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By blok
27th Oct 2010 15:24

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Thanks spidersong.

I should have mentioned I was aware of the Kingscrest case.

This is something different.  Being touted by Grant Thornton at the moment.  Dont know the detail but it seemingly involves a subsidiary and routing of services some way or another.

If I hear anything further I will PM you.

 

Anyone else know about this?

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By spidersong
27th Oct 2010 15:45

Ah that one.

Ah...in that case I have heard of something that may be in a similar vein, I think the idea is to put a middleman in a supply chain who is not a 'state regulated private welfare institution'.

The exemption applies to a supply of care by a state regulated body. The middleman is not stateregulated, if it charges out supplies of care it's standard rated. The original body is, and so supplies of care are exempt, however the middleman is the recipient of their supplies and it is not receiving a supply of care, it's receiving a supply which I've never seen anyone adequately categorise. Basically the middleman receives admin services, staff etc, but the end effect is meant to be that since the state reg body aren't providing direct care, they're able to standard rate, and recover input tax, the middleman receives the services and charges at a nominal profit. To all intents and purposes the institution in which the care is given is still state regulated and so statutory inspections etc are maintained.

I never saw any workings on how it could work without upping end user costs and pushing the home out of the market, or anything that convinced me that HMRC would agree that the initial supply wasn't one of care. Indeed there was a tribunal in regards to Help the Aged that basically supported the idea that a middleman didn't change the nature of the supply. However it may be that they have an 'in', or they may be looking for enough clients to make fighting their corner cost effective.

Of course it may be something completely different.....

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By blok
27th Oct 2010 18:05

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Spidersong,

I have some infromation for you on the scheme.  Its a diagram of the proposal.

I dont know how to send you a Private message, can someone help.

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Replying to User deleted:
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By neildockar
29th Jun 2012 13:20

Care Home VAT

Hi There,

Just come across this posting.

Is the Scheme still live and legal?

If so I'd really appreciate any details you could send me.

Many thanks

Neil

 

 

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Replying to blok:
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By natral
28th Jan 2019 15:56

Dear blok, I have just come across this string of messages. Are you able to send me the diagram, please? I'm a care homes operator and I too have a firm approaching me with a claimed HMRC VAT recovery scheme using a method called 'contract restructuring', i.e. a fully disclosed to HMRC service which involves a non-regulated entity running alongside the current structure for the contracts for provision of care making the supplies become standard rated for Vat.

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By Phil Rees
28th Oct 2010 12:52

Click on his name where it says "posted by"

and all will become clear.

 

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By blok
28th Oct 2010 14:06

.

I have tried that and it still isnt clear!

 

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Euan's picture
By Euan MacLennan
28th Oct 2010 15:11

Spidersong does not "Allow private messages"

I agree the option to send spidersong a private message does not appear if you click on his name to open his profile.  He presumably hasn't ticked the "Allow private messages" box in his Private Message Settings, so the option does not appear, as it does in your, my and Phil's profiles.

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By Becky Midgley
28th Oct 2010 15:41

Spot on

Thank you Euan, you are exactly right.

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By Phil Rees
28th Oct 2010 16:30

Sorry, I've been working.

One assumes things.

There is a reason why that word begins with "[***]" and continues with "u" and "me"; especially the latter.

 

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