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VAT status of Private care provided

CQC Unregistered client providing private care. is it exempt income or not?

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Hi 

First question here. 

Our client is not registered with CQC and provides private care to individuals but get paid by the council. is this VAT exempt income? 

They also have a pool or other carers who are used when needed. They also provide personal care directly to receivers where the receivers of care dont qualify for government funded care.

I am confident that their income is all vated but just want to double check with experts here.

 

 

Replies (11)

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chips_at_mattersey
By Les Howard
27th Nov 2019 13:36

Care falls into the welfare exempt when it is provided by a charity or state-regulated provider. From your comments this seems not to be the case, so the supplies are taxable.
(HMRC are starting to challenge such rulings, and try to argue FOR exemption, so make sure you have a more formal ruling in writing.)

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Replying to leshoward:
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By Amanacca
28th Nov 2019 07:35

Thanks Les Howard.

Two prominent cases have been ruled in favour of HMRC by upper tribunal.

‘ so make sure you have a more formal ruling in writing’ in what sense ? Us responding to client with advice ?

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Replying to Amanacca:
chips_at_mattersey
By Les Howard
28th Nov 2019 13:20

Yes, in my view, the client should receive a reasonably robust written report, providing clear reasons why the supply is taxable rather than exempt, or vice versa.

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RedFive
By RedFive
29th Nov 2019 11:54

I've got a similar client who we treat as VATable supplies as they are not CQC or Charity (or other) registered.

>£750k t.o per annum so hefty VAT bills. I'm therefore very interested in why HMRC would argue for them to be exempt?

Also if you could point me to those UT cases I would be very obliged.

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Replying to RedFive:
Psycho
By Wilson Philips
29th Nov 2019 12:18

If the recipient (eg Council) is VAT-registered they will be able to recover the VAT, so VAT-neutral for HMRC. But exempt status would block recovery of input VAT by the provider - I assume that this is HMRC's angle.

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Replying to RedFive:
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By Amanacca
29th Nov 2019 12:25

The cases are discussed here. https://www.charitytaxgroup.org.uk/commentary/vat-care-services-provided...

The supply is vatable.

Out of interest, who was your client's previous accountant that they have reached >£750k revenue and were not registered for VAT.

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Replying to Amanacca:
RedFive
By RedFive
29th Nov 2019 12:34

Thanks, my client has been registered for VAT from date of breaching £85k t/o based on the hitherto understanding that because it is not regulated it cannot be exempt. > not sure how you read they had not been registered from my description?

In reading the above it appears these two cases have both won appeals to be expempt and in the latter case to backdate that exemption 5 years.

http://www.bailii.org/uk/cases/UKFTT/TC/2016/TC05197.html

http://www.bailii.org/cgi-bin/format.cgi?doc=/uk/cases/UKFTT/TC/2017/TC0...(the)+AND+(learning)+AND+(centre)+AND+(romford)

My client's company is broadly similiar to the above so I am trying to establish whether we have grounds to de-register (and back date) knowing full well HMRC will refuse and will need to appeal.

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Replying to RedFive:
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By Amanacca
29th Nov 2019 12:40

UT reversed the decisions in both cases, which means VAT has to be charged by unregulated care provider.

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Replying to Amanacca:
RedFive
By RedFive
29th Nov 2019 12:42

Ah, just read your link. I hadn't seen the follow up on the two cases I quoted. So they both lost on UT Tribunal in January it seems.

At least my client won't sue me for incorrectly registering them in the first place ;-)

In which case we are both right and there doesn't seem to be any way around it, thay have to charge VAT.

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Replying to RedFive:
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By Amanacca
29th Nov 2019 12:44

So true.

Now you can take a sip of that coffee :)

For reference, read this.

https://assets.publishing.service.gov.uk/media/5c4853d3e5274a6e6b6716fa/...

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Replying to Amanacca:
RedFive
By RedFive
29th Nov 2019 12:56

Thank you.

I kind of panicked when I first read the question and initial rulings thinking I had missed something, then got excited thinking my client could get loads of VAT back, then disappointed when I read they were overturned and now back relieved that nothing has changed.

I definitely need a coffee!

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