Last week, HMRC released a VAT brief (link below) as a result of the Pennine Care NHS Trust VAT tribunal decision. As a result of this case, HMRC have changed their policy with regard to the treatment of the construction, or first grant of new care homes; they now accept that personal care may go beyond a supportive/supervisory role to assist with living, but could include both therapeutic and clinical treatment.

https://www.gov.uk/government/publications/revenue-and-customs-brief-2-2017-vat-care-homes-and-hospitals/revenue-and-customs-brief-2-2017-vat-care-homes-and-hospitals#claims-for-overpaid-vat

This is great news for the NHS and the key implication of this for many Trusts is that for some mental health (or other) facilities that provide residential accommodation will now qualify for zero-rating, whereas previously HMRC may have classified the building as a ‘hospital’ and therefore disallowed zero-rating. You will be able to utilise this new guidance going forward and also – there is an opportunity for a retrospective claim (overpaid VAT) if you have built any facilities which provide residential accommodation alongside care in the last 4 years.

If you do have any properties which you think may qualify or may have been refused previously on the basis it is a ‘hospital’ – please contact us for advice on 01732 868 266.