Commentary

RCB/2/17 VAT—care homes and hospitals

Part V16 Forms and other HMRC material

RCB/2/17 VAT—care homes and hospitals

RCB/2/17 VAT—care homes and hospitals

Revenue & Customs Brief, Issue 2. 28 July 2017

1 Purpose of this brief

This brief sets out HM Revenue and Customs (HMRC) revised policy on the VAT zero rate for new buildings intended for use solely for a relevant residential purpose as care homes. It explains the distinction between buildings used as care homes (and similar facilities) which are eligible for zero rating and hospitals which are not.

2 Who should read this Brief

All parties involved in the construction and supply of buildings that are designed as care homes and hospitals.

3 Background

The construction and first grant of an interest in a building, intended for use solely for a relevant residential purpose as a care home, is zero rated. A care home is one that provides residential accommodation with personal care to people in need of such care. Care may be needed because of:

  1.  

    —     old age;

  2.  

    —     disability;

  3.  

    —     past or present dependence on alcohol or drugs;

  4.  

    —     past or present mental disorder.

The construction of a hospital is standard rated. However, just because an institution is badged as a

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