CARE HOME OWNERS - CLAIM BACK YOUR VAT!

The current law does not allow care home owners to register for and reclaim VAT however this was not always the case.There has been a change in the law which now prevents residential care homes from treating their supplies as standard rated for VAT purposes since 2002, there is a possibility that they can recover input tax suffered up to that point.

In a test case which was won on appeal, residential care home Kingscrest successfully argued that because it was a partnership it was not covered by the exemption for healthcare under UK legislation and as a result its services must be standard rated.

Since its clients were Local Authorities who could reclaim the VAT on fees, Kingscrest could pass on the VAT chargeable to the relevant Local Authority and recover the input tax on its running costs.

As a result of the case, new legislation was brought into effect on 21 March 2002 making it clear that the provision of care in a residential home was exempt from VAT.

However, there is no reason why the operators of a residential home cannot decide that it was making standard rated supplies up to 21 March 2002 and benefit from a reduction in their overheads up to the time the law was amended.

Care homes which are interested in pursuing this opportunity will need to make a backdated application to register for VAT.

The above means that eligible residential homes can backdate a VAT registration to 1/1/93, account for VAT on their income and reclaim VAT on expenditure, then deregister with effect from 31/12/02. Some of the claims could be substantial and tend to average £50,000.

Please contact me for further information if you wish to claim on a NO WIN= No FEE Basis.

Please take advantage of this before HMRC find a way of stopping these claims.

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