RCB/9/21 VAT liability of daycare services supplied by private bodies in England and Wales
Revenue & Customs Brief, Issue 9. 11 June 2021
Purpose of this brief
This brief explains HMRC's position following the judgment of the Court of Appeal in the joint appeals of LIFE Services Ltd and The Learning Centre (Romford) Ltd and the Supreme Court's decision to refuse leave to appeal on 15 January 2021.
The cases concerned the VAT liability of daycare services provided by private bodies to vulnerable adults in England. The earlier decisions of the Upper Tribunal were affirmed in both cases.
This confirms that HMRC's view of what the legislation means is correct. Providers must be charities, public bodies or regulated by the relevant authority in the country concerned, in order to be able to exempt their supply of services.
Who needs to read this
This brief applies to:
• organisations that supply daycare services in England and Wales (and their advisers)
• businesses with appeals claiming their supply of daycare services are exempt, where the appeals were stood behind the appeals by LIFE Services Ltd and The Learning Centre (Romford) Ltd
Background to the Court of Appeal's judgment
The supply of welfare services by a charity, or a state-regulated private welfare institution or agency, is exempt from VAT under Item 9 of Group 7 of Schedule 9 to the VAT Act 1994.
The provision of welfare services by private bodies that are not charities is only exempt from VAT if the body concerned is a state-regulated, private welfare institution or agency.