Key Considerations for VAT Welfare Restructuring: Streamlining Implementation

1) Is there an up-to-date RAG list of Local Authorities that are accepting this VAT charge?

Yes currently available on the Care England website here: https://www.careengland.org.uk/list-of-local-authorities-vat-recovery-status/

2) And how many LAs accept the 4 years back date charge?

This varies across the country but significantly the principles have now been endorsed under a tribunal decision issued 12 February 2024, please get in touch with jock@kieran-lynch.co.uk for details

3) Is the £1m to £2m funded fees per entity or per VAT group?

Per VAT group

4) Regarding shareholders, what if you have 2 shareholders owning 50% each?

HMRC will require a person or entity with 51% or more. This may well be a topco/holdco which owns the subsiduary opcos 100% for example

5) Can you advise on VAT recovery on agency costs? we run supported living for adults with Autism and LD. Agencies expect us to have a registered nurse in each home to qualify for charging VAT Is this right?

The general principle is that the supply of qualified staff is exempt for vat purposes, non-qualified staff are standard rated for vat – unless supplied as a package of staff under the supervision of a qualified person.

6) What is the typical value of the benefit?

4% of funded turnover for residential providers – typically £1,400 per funded bed per annum, homecare is lower at around 2% of turnover.

7) Where are the larger providers on this issue?

I think there is now a general acceptance that the large providers recognise they are losing competitive advantage by not implementing the vat arrangements and therefore are at varying stages of implementation or preparing for implementation.