VAT position for drug addiction therapist
I recently took over a client who is a therapist for drug addicts who have been treated. She basically gets them into housing and gives continued support and counselling. Local authorities pay her for this (including effectively reimbursing her for the rents she pays out)
The first thing i said when I took over was that she should be vat registered. For 2007/08 turnover was £96k. However, part of this related to the rental of property so one assumes this can be deducted which may bring her back under the limits.
Having said that 2006/07 the turnover was higher.
I have looked at the vat exempt income notice and am unsure whether she would fall under the category 'services performed by health professionals'. Specifically:
3.11 Rehabilitation services
We accept that the principal purpose of most rehabilitation services is to improve both the physical and psychological health of the individual and as such, they are exempt. The only exception to this is reports commissioned by lawyers for the purpose of quantifying the additional costs of disability and hence, the value of any claims for compensation - these are liable to VAT at the standard rate. Reports commissioned for the purpose of determining what is required to assist rehabilitation and recovery are exempt.
Has anyone any thoughts or advice?
Not enough info...
Is your client a registered health professional? (The Health Professions Order 2001 can be found here: http://www.opsi.gov.uk/si/si2002/20020254.htm but there is a short list at http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&id=HMCE_CL_000121&propertyType=document#P63_5951
or is she directly supervised by a health professional (that's listed as above)?
Otherwise, have you considered whether your client may be exempt under the VAT rules for Welfare services. (have a look at http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_PROD_009852&propertyType=document#P41_3045
Is she or her business state-regulated? Which could satisfy either the Health or the Welfare rules.
(Though the fact that she's arranging housing may suggest "social care" rather than "health care" and also a Local Authority is paying her, although the lines between health & social care are sometimes a bit blurry)
Also, does she work with individuals or groups - for the latter, could she be said to be providing welfare advice (reduced VAT)?
The rent payments may qualify as disbursements - depending on the exact nature/arrangements of the payments. Have a look here: http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&id=HMCE_CL_001542&propertyType=document#P20_1131
Louise
www.figurate.co.uk
www.happyaccountant.com