Following the High Court Judgement in the Kingscrest Associates Ltd. & Montecello Ltd. case, many homes are now eligible to claim back VAT they have paid between the periods of January 1993 - March 2002.
Under the terms of the VAT Act, 1994 schedule 9 Group 7 item 4 'care' was restricted to care or surgical nature. The effect of this was that unless the care supplied was of a surgical nature, the supplies were considered to be taxable at the standard rate. However, the Value Added Tax (Health & Welfare) Order 2002, amended the previous legislation to confirm that residential care provided by commercially-run institutions was exempt from 21st March 2002.
It is important to note that any output tax is charged only on the Local Authority element as HMRC have announced that in respect of private residents they will allow VAT not to be accounted for due to the obvious difficulties in recovery. The concession is that the input tax reclaimed has to be restricted on a pro-rata basis.
It is our role to negotiate with the Local Authorities concerned in order to charge the output tax for the relevant period, arrange a registration and de–registration for VAT with the HRMC and reclaim all eligible input tax.
