HMRC clamp down on VAT grouping within the care industry

HMRC have published Revenue & Customs Brief 2/25 which provides information about the treatment of state regulated care providers that form a VAT group with non-state regulated providers of welfare services.

This brief highlights that HMRC have identified a growing use of VAT grouping structures whereby state regulated care providers join with non-state regulated providers in order to recover VAT on costs related to welfare service supplies that would otherwise be exempt. With immediate effect HMRC will exercise their powers to refuse new VAT group registration applications specifically designed to implement these arrangements.

In addition HMRC are launching a programme to review and investigate all instances where it is known or suspected that an avoidance scheme is in operation within a VAT group arrangement described in the Brief. During this review HMRC may request additional information will assess each case individually and where necessary will...