Does anyone have experience of the qualifying care relief system applied to foster care and shared lives providers? Rather than keep full accounts, simplified expenses can be claimed against income being £10,000 plus £250 per week per adult. I am only dealing here with adult placements. My problem is that I cannot find a definition of relevant income. My client has included the payment from the local authority to provide care plus housing benefit paid over per person. However, also included in her file is a letter from the local authority to her resident setting out a weekly client contribuition that the local authority expected the person to hand over towards food and utilities. She does receive this from her client. My feeling is that the expense allowance is intended to cover the cost of food and utility bills and that the payment received direct from the client should be included as income. If I were to produce full accounts showing actual expenses I would expect to include the client contribution and I would have thought the income under the simplified system should be the same.
However, my client is insistent the client/resident contribution is not taxable and that she has had this confirmed by other shared lives care providers. The general HMRC guidance in HS236 refers only to income from a local authority whilst S805 ITTOIA 2005 on which the shared lives relief seems to be based talks more generally of "receipts in respect of the provision of foster care". The care she provides to her residents is amazing, the shared lives providers give a great service for care in the community. Their payments from the local authority have not increased for some time and I know some providers are considering giving up. I wonder if the client contribution has increased as a back door way of boosting their income. I certainly don't want to stir up any problems for shared lives providers but neither do I want to risk submitting understated income. So should "income" only comprise that from local authorities or should it also include the client contribution?