VAT relief (for residents in a Hospital or Nursing Home)
Every now and again, we are asked about VAT relief for people with Disabilities. The subject normally arises in the form of a comment such as;
” Mum doesn’t pay VAT”. Strictly speaking that isn’t true. There is however a subtle but important definition that makes all the difference. All sales attract VAT, however some people under certain circumstances are granted relief from VAT and as such the rate is reduced to “zero” which is not the same as a product being exempt from VAT.
The difference comes starkly into focus when the criteria for relief are fully understood.
Firstly, the product being purchased must be clearly and distinctly made to suit the needs of a disabled person, so for example a wheelchair would meet that definition. Then there are things that will help a disabled person but are not in fact explicitly made for disabled people, say for example a long handled brush and pan. This is useful to anyone with a bad back or a high seat chair that makes it easier to get up from, neither are solely for use by a disabled person.*
Secondly, the person must have a lasting or chronic condition, i.e. not a broken leg or something that will heal or get better with treatment over time. In other words a long term condition that will most likely remain
Thirdly, The purchase must be for personal and domestic use, in other words not for business purposes, such as a care home purchasing equipment for patient care. The reason i cited a care home for example was that a care home does not charge VAT on its fees for care and as such it cannot register for VAT therefore it cannot reclaim VAT. Another example would be a supermarket that wants to provide its customers with a wheelchair to use in the store. The supermarket company can claim the VAT back as a business cost through its accounts but it would still pay the VAT on the invoice and then claim it back in the normal way that a VAT registered company would do.
In respect of residents in a Hospital or Nursing home, sadly the term “Personal and domestic use” is barred from eligibility for a resident of either of these. Our view is that this definition has been used to close a loophole whereby relief could be given to care homes who may exploit that definition. We have talked to HMRC and whilst the staff we spoke to were sympathetic they could not come up with a solution other than if the Nursing home being a registered charity, if this were the case then relief could be given.
The important thing to remember is this, meeting the threshold for eligibility is dependant on all of the criteria being met, if any of the criteria are not met the relief is not available.
Our staff have lots of experience and we are more than happy to guide you as we also have a duty to ensure we charge VAT where it applies and to make sure all the criteria are met in order to supply goods with the relief applied.
The relevant documents are available online here
There is a HMRC help line and the number is 0300 123 1073