VAT on carers. Is VAT due on the supply?

In the case concerning Truth Recruitment Limited (TRL) the First Tier Tribunal (FTT) whether its supplies are exempt from VAT pursuant to Section 31 and Group 7, Schedule 9, VATA94.

Dismissing TRL’s appeal, the FTT agreed with HMRC that TRL’s supplies do not fall within Item 1 and therefore are not exempt from VAT. With this in mind it did not need to make any finding about whether the carers were providing ‘medical care’ for the purposes of Item 1. The supplies were thus found to be liable to VAT at the standard rate.

VAT legislation

The VAT Act 1994 Section 31 exempts supplies that are listed in Schedule 9.

At the relevant time Item 1, Group 7, Schedule 9 provided for: the supply of services consisting in the provision of medical care by a person registered or enrolled in any of the following – (a) the register of medical practitioners; (c) the register kept under the Health Professions Order 2001; (d) the register of qualified nurses, midwives and nursing associates maintained under article 5 of the Nursing and Midwifery Order 2001.

Note 2 provides: paragraphs (a) to (d) of item 1 and paragraphs (a) and (b) of item 2 include supplies of services made by a person who is not registered or enrolled in any of the registers or rolls specified in those paragraphs where the services are wholly performed or directly supervised by a person who is so registered or enrolled.

At the relevant time Item 4, Group 7, Schedule 9 provided for: the provision of care or medical or surgical treatment and, in connection with it, the supply of any goods, in any hospital or state-regulated institution.

At the relevant time Item 9, Group 7, Schedule 9 provided for: the supply by (a) a charity, (b) a state-regulated private welfare institution or agency, or (c) a public body, of welfare services and of goods supplied in connection with those welfare services.

Item 10, Group 7, Schedule 9 provides in broad terms an exemption from VAT for supplies that meet various criteria including that they are ‘incidental to the provision of spiritual welfare’.

Case details

TRL is a VAT registered limited company which provides carers, including senior carers, to nursing and residential care homes. TRL argued that VAT on carers should not be subject to VAT as the care homes make exempt supplies and so it should not have to charge VAT on carers to them. Further, other companies supply the care homes and do not charge VAT.

In disagreement, HMRC asserted that VAT on carers was appropriate because TRL’s supplies did not fall within the exemption because: (i) the services must be carried out or directly supervised by a person registered or enrolled on the registers specified in Item 1; and (ii) no medical care is provided. HMRC’s position was also that TRL’s supplies were supplies of staff which do not fall under any of the items in Group 7.

Considering VAT on carers and whether TRL’s supplies were exempt, the FTT noted that none of the carers were registered or enrolled in any of the professions listed in Item 1, nor did the supplies consist of services wholly performed by or directly supervised by a person registered or enrolled in any of the professions listed in Item 1.

The FTT also held that the exemption status of supplies does not depend on the VAT treatment of the recipient. Findings about other companies’ supplies to care homes are also not relevant. TRL’s assertion of unfairness in the assessment lacked objective evidence, leading to no findings supporting this claim. Consequently, the FTT concluded that there is insufficient basis to challenge HMRC’s assessment in relation to VAT on carers as unfair or irrational.

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