In September 2017, HMRC released a VAT brief as part of the Pennine Care NHS Trust VAT tribunal.
As a result, HMRC have changed their policy with regard to the treatment of the construction and first grant of new care homes and they now accept that personal care in fact goes beyond a supportive/supervisory role to assist with living, but can include clinical and therapeutic treatment.
When determining whether an institution is a care home or a hospital, HMRC will now consider whether there is provision for a person to be in residence for a lengthy period.
Please see link below.https://www.gov.uk/government/publications/revenue-and-customs-brief-2-2017-vat-care-homes-and-hospitals/revenue-and-customs-brief-2-2017-vat-care-homes-and-hospitals#claims-for-overpaid-vat
This is potentially great news for the NHS and the implication of this for many Trusts is that for some mental health facilities that provide residential accommodation will now qualify for zero-rating.
In the past HMRC may have classified the building as a hospital and disallowed the zero-rating.
This guidance can be utilised moving forwards, but there is also an opportunity for a retrospective claim of overpaid VAT, if you have built any facilities which provide residential accommodation alongside care in the last 4 years.
Rockford Associates regularly assist trusts in reclaiming overpaid VAT and if you have any properties which you think may qualify or may have been refused previously there could be potential opportunity for reclaim.
Please contact us below;