- The UK care home sector faces VAT challenges due to a mix of exempt and taxable supplies.
- Careful VAT planning and compliance are crucial to avoid HMRC challenges.
- HMRC’s Spotlight 70 targets VAT group structures converting exempt services into taxable supplies.
- Such arrangements may lead to VAT assessments, penalties, and reputational damage.
- Care services in registered care homes are typically VAT exempt, limiting input VAT recovery.
- Partial exemption complexity arises from taxable activities like room letting and catering.
- Capital expenditure on construction and refurbishment poses significant VAT risks.
- Outsourcing services can increase VAT costs when input VAT is non-recoverable.
- Incorrect VAT treatment can lead to liabilities, penalties, or lost recovery opportunities.
- Tips for managing VAT include early planning for capital projects, reviewing income streams, maintaining records, conducting partial exemption reviews, and training staff on VAT basics.
Source: rpclegal.com
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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