VQOTW: VAT and Welfare Services

My client provides domiciliary care services to the elderly and they are approaching the VAT registration threshold. The client is regulated by the Care Quality Commission and the individuals receiving the supply are under the instruction of a care plan and require help with personal care and domestic tasks. Can you confirm if my client is required to register for VAT?

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A. Under VAT Act 1994 Schedule 9 Group 7 supplies of welfare services and connected goods by charities, public bodies, state regulated institutions or agencies are exempt from VAT.
The legislation defines welfare services as:

  • The provision of care, treatment or instruction designed to promote the physical or mental welfare of elderly, sick, distressed or disabled persons;
  • The care or protection of children and young person;
  • The provision of spiritual welfare by a religious institution as part of a course of instruction or a retreat, it must not be designed primarily to provide recreation or a holiday.

HMRC’s Notice 701/2 Welfare further specifies that the services must satisfy the following conditions:

  • The recipient must be an elderly, sick, distressed or disabled person;
  • The care, treatment or instruction must be part of a specific individual care plan and the service must relate to it;
  • An assessment of the recipient’s health condition and medical needs must have been carried out by an appropriately trained person.

Notice 701/2 s.2 further elaborates on situations where domestic tasks are included as part of a care package as the recipient is unable to carry out those tasks safely or adequately.
Once it has been established that the services in question qualify as welfare, the status of the provider must be considered. If the supplier is not a charity or public body, they must be a state regulated private welfare institution or agency, which is registered with or regulated by one of the following bodies or in some case exempted from regulation (if care is provided below a certain number of hours for example);

  • Care Quality Commission;
  • Scottish Commission for the Regulation of Care (The Care Commission);
  • Care and Social Services Inspectorate Wales;
  • Northern Ireland Regulation and Quality Improvement Authority;
  • Office of standard in Education (OFSTED);
  • Any other similar regulatory body.

Therefore provided your client is supplying care services under a care plan to someone who is elderly or disabled and the client is appropriately regulated, their services will be exempt from VAT and the value of those services will not count towards the VAT registration threshold.


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If you have a VAT query why not contact the VAT Advice Line on 0844 892 2470 to discuss the implications. Our team of experts have a wealth of experience and can also provide a written consultancy service at £180 per hour plus VAT.

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VAT Advisor
0844 892 2470


Arti has worked in VAT since 2004 spending 11 years with HMRC. During her time in the department she was a visiting officer, a business records check officer providing educational visits and spent the last three years on the Alcohol Fraud team where she gained a good understanding of civil penalties and appeals. In addition she was an IT specialist providing support to colleagues and an associate trainer delivering VAT and Penalties training.

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