- HMRC issued a Policy Brief on VAT grouping in the care sector on 24 April 2025.
- Care providers typically supply exempt welfare services, leading to VAT recovery issues.
- VAT Group restructuring involves a non-regulated entity making taxable supplies.
- This strategy allows VAT recovery on costs but is seen as tax avoidance by HMRC.
- HMRC views these arrangements as artificial and incompatible with VAT exemption rules.
- HMRC can remove entities from VAT groups to protect revenue.
- Risks for care providers include ejection from VAT groups, VAT assessments, and penalties.
- Businesses may face reporting obligations under tax avoidance scheme rules.
Source: deeksvat.co.uk
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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