Use of VAT grouping within the care industry

We would like to inform you about an important update from HM Revenue & Customs (HMRC) regarding the use of VAT grouping within the care industry. This update is particularly relevant for state-regulated care providers who form a VAT group with non-state-regulated providers of welfare services.

Key Points:

  • VAT Grouping: HMRC has issued new guidance on VAT grouping structures used by care providers. They consider these structures as a form of tax avoidance and will refuse new VAT group registration applications designed to implement these structures. HMRC will also review and investigate existing VAT groups suspected of using avoidance schemes.

  • Council's Position: Please note that the council will not be novating any existing contracts. This means that current contracts will remain as they are and will not be transferred to another party.

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