BB/1A/03 VAT—exemption for welfare services provided by state-regulated private welfare agencies
Business Brief, Issue 1. 20 January 2003
This article outlines a change to the VAT treatment of commercially provided welfare services, which will accompany the implementation of a statutory regime of regulation and registration by health and social services administrations across the UK. It also provides details of a concession that will allow exemption for welfare services from 31 January 2003.
Home care services
In Business Brief 3/00 (BB/3A/00, Division V16.3) Customs announced their intention to introduce a VAT concession for home care services, alongside the Department of Trade and Industry's changes to regulations governing the conduct of employment agencies and employment businesses and the rights of work-seekers using them. The concession would have allowed businesses providing home care services to charge VAT only on their commission, and not on that part of their charge relating to the salaries and associated costs of home care workers.
The changes announced below cancel the planned concession, and replace it with a more comprehensive relief, which will allow the whole charge for welfare services (including home care) supplied by domiciliary care and other state-regulated agencies to be exempt from VAT.
New VAT treatment
At present, welfare services are only exempt when supplied by public bodies; charities; or establishments, such as residential care homes, that are state-regulated private welfare institutions. The Government will shortly, subject to Parliamentary approval, also exempt from VAT welfare services supplied by state regulated private welfare agencies.
State-regulated private welfare agencies are those agencies that are