I have a Care Home client that was eagerly awaiting the decision in LIFE Services vs HMRC. HMRC argued that day care was standard rated due to LIFE being a profit making company rather than a charity. HMRC lost in FTT as UK law 'offended' EU Law in terms of fiscal neutrality i.e. a compay should not be treated different to a charity.
So....all seemed OK.....however a competitor provider has written to all of their customers advising that they've had a HMRC inspection and been told to start charging VAT from a specific date later this year. They sent this letter out even after LIFE won the Tribunal hearing.
Does anyone here act for any care homes, or could anyone shed any light why they would do this, and what are other care homes doing in the wider community?
Thanks for any help!
Replies (4)
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HMRC may or may not accept the decision of the Tribunal. They may also argue that the nature of the care provided is different, and would mean the services fall outside the exemptions.
It depends on the Client's approach to risk.
Also, on how he is funded: is he a NPM? Are his residents privately or local authority funded?
Does he want to start charging VAT, and risk being unable to recover potentially over-charged VAT under the unjust enrichment rules?
Or will he treat his supplies as exempt, and risk an HMRC intervention?