Care home and home care bosses point to mobility retailers as they lobby for VAT reform
In an open letter to chancellor Rishi Sunak, six social care bosses are calling for a reform to what they describe as a “punitive VAT regime” and have drawn a comparison to the mobility retail sector.
The social care providers are urging the chancellor to change social care services to be zero-rated for VAT rather than exempt from VAT.
Under the current tax system, goods and services provided by regulated social care organisations are exempt from VAT, meaning that they do not charge VAT on their services.
The letter highlights, however, that the current VAT status means that social care providers cannot reclaim VAT on expenses.
“Social care services (referred to as ‘Welfare services and goods’) should become zero-rated for VAT, rather than exempt,” argues the letter.
“Meaning that we would not charge VAT on our services to the most vulnerable in society but could reclaim VAT on our expenses such as PPE, utilities, rent, repairs and many other services.”
The letter has been penned by Martin Jones, CEO of Home Instead Senior Care UK; Michelle Fenwick, Franchise Director of Heritage Healthcare; Ken Deary, CEO of Right at Home UK; Yvonne Tomlinson, CEO of KarePlus; Wayne Smith, Finance Director at Bluebird Care; and Alex Green, Franchising Director at Radfield Home Care.
It comes following the government’s introduction of a temporary zero rate applying to supplies of PPE which is set to last until the 31st July 2020.
“The COVID-19 pandemic is bringing an issue that has been facing care homes and the home care sector into sharp focus,” states the social care providers.
“That issue is the financial pressure the sector is operating under. A major contributor to this pressure is the punitive VAT regime we operate under.”
In particular, the social care bosses point to the mobility sector, contending that whilst both sectors help the same demographics of people, mobility retailers have the benefit of reclaiming VAT on their expenses.
“Consider our position versus mobility aids retailers, which are usually serving the same client base – people over 65 and people with disabilities,” emphasises the letter.
“Mobility aids suppliers are zero rate for VAT, which means they sell their products or services (such as a stairlift installation) without charging VAT on most products or a maximum of 5% on a minority of products, yet they can reclaim all VAT on any input expenses incurred.”
Asserting that a change to regulated social care providers VAT status would have a relatively small cost to the Treasury annually, the social care leaders state that “it would make a significant contribution to keeping financially under pressure social care providers in business, both in the short and long term.”https://thiis.co.uk/care-home-and-home-care-bosses-point-to-mobility-retailers-as-they-lobby-for-vat-reform/https://i1.wp.com/thiis.co.uk/wp-content/uploads/2018/12/wheelchair-image.jpg?fit=1000%2C702&ssl=1https://i1.wp.com/thiis.co.uk/wp-content/uploads/2018/12/wheelchair-image.jpg?resize=150%2C150&ssl=1Coronavirus NewsCOVID-19 Sector NewsGovernment & Local AuthoritiesNewsroomSector NewsBluebird Care,coronavirus,COVID-19,Heritage Healthcare,Home Instead Senior Care UK,KarePlus,mobility retailers,pandemic,PPE,Radfield Home Care,Rights at Home,Rishi Sunak,social care providers,VAT exempt,VAT reform,zero rated VATIn an open letter to chancellor Rishi Sunak, six social care bosses are calling for a reform to what they describe as a “punitive VAT regime” and have drawn a comparison to the mobility retail sector.The social care providers are urging the chancellor to change social care services to...Calvin BarnettCalvin Barnettcalvin@thiis.co.ukAdministratorTHIIS Magazine