What is a Kingscrest VAT claim?

Kingscrest Associates Ltd and Montecello Ltd (t/a Kingscrest Residential Care Homes) successfully challenged HMRC’s interpretation of VAT law, allowing care home operators to register for VAT and recover VAT on costs.

The Kingscrest associates and Montecello case was heard at the European Court of Justice in 2005.

As a result of the Kingscrest VAT claim case, our VAT specialists at Solve VAT have helped many UK care homes to recover substantial amounts of VAT on historic expenditure. Such expenditure included many items including equipment and property repairs and extensions

Unfortunately, there were restrictions at the time, being some 20 years ago, that prevented the recovery of VAT on costs in full. Private residents were excluded from claiming, and some Local Authorities frustratingly refused to entertain a Kingscrest VAT claim for any care home. A further historic issue was that some claimants were expected to present documentary evidence of historic expenditure.

Not the end for a Kingscrest VAT claim

The ability to lodge a Kingscrest VAT claim was withdrawn in 2016 leading to many care homes missing out on substantial sums.

Judicial review

Action is being taken to re-open Kingscrest VAT claims for anyone who operated a care home between 1973 to 2002. This opportunity is available to new claimants and to those who have already claimed as their historic claims could now be increased. A permission hearing for Judicial Review that was listed to be heard on 13 May 2026 by the Upper tier Tax Tribunal.

What is new

There has been a previous Judicial Review in relation to such Kingscrest claims. The case of Raymond Clarke was heard by the Tax Tribunal in 2017 and was unsuccessful. The new issue seeks to argue different points on behalf of the taxpayer.

The new claims will include private residents, go back to 1973 and attract interest payments from HMRC, and will not require evidence of expenditure, for example documentation such as remittance advices, and trading accounts, or other accounting records, due to a standardised methodology which it is anticipated will be agreed with HMRC.

A claim will still be possible if the business has ceased trading, was sold or has been inherited.

Unlike any previous claims that may have been made, new claims are not capped to 1993. This window of opportunity means you could be able to reclaim VAT from your very first day of trading after April 1973 significantly increasing your potential Kingcrest VAT claim refund.

Covering All Trading Activities

This new opportunity allows you to claim back VAT on all trading activities not just those linked to selected local authorities. Historically a number of local authorities were unwilling to assist care homes in recovering the VAT. If your business has expanded or changed over time, this is the perfect chance to recover VAT across your full operations.

Current activities

We are acting for a number of different care home clients in relation to this matter. Some examples which demonstrate the possible breadth of this opportunity include:

the beneficiaries of a deceased’s estate where the deceased operated a care home as a sole proprietor; and
care homes where the operator, being a limited company, partnership or sole proprietor, sold the businesses a number of years ago and/or ceased trading.

A lead case is currently listed to be heard by the Upper Tier Tax Tribunal in December 2026. Due to the nature of the work involved we are able to act on the basis of a small upfront payment plus a no win no fee amount.

A care home that operated with 30 beds over a 15 year period could be entitled to a VAT claim of £315,000 plus interest.

Interest on claims

A Kingscrest claim which is now made, or a revised previous claim, could also result in interest being due on any repayment. Bearing in mind the rates of interest in the 1970’s and 1980’s the amount of interest due could exceed the amount of any VAT repayment.

Contact

To find our more about our VAT specialists and how they can help with your VAT claim call 0161 883 2120.