HMRC has confirmed that payroll services provided by a charity
to enable disabled people to employ a personal assistant to help them live
independently in their own homes are standard rated for VAT purposes. Revenue
& Customs Brief 16/2020 sets out HMRC’s position following the decision
by the Cheshire Centre for Independent Living (‘Cheshire’) to concede its
appeal in the Upper Tribunal.
The issue in the case was whether the payroll services were
directly connected with the provision of care and therefore exempt under the
welfare exemption. Although the First-tier Tribunal initially allowed
Cheshire’s claim for exemption ([2019] UKFTT 354 (TC)), HMRC appealed to the
Upper Tribunal.
Cheshire opted to withdraw its appeal in the Upper Tribunal.
This means that the First-tier Tribunal’s decision has been overturned and it
is not possible to rely on that decision as determinative. Cases for claims to
exemption where the facts are materially similar to those in the Cheshire case
will be rejected.
In a later application ([2020] UKUT 275 (TCC)), Cheshire was
able to recover some of its costs associated with the appeal on grounds that
HMRC had unreasonably failed to run what turned out to be its winning argument
sooner. That failure had resulted in Cheshire incurring significant costs
unnecessarily.
HMRC has confirmed that payroll services provided by a charity
to enable disabled people to employ a personal assistant to help them live
independently in their own homes are standard rated for VAT purposes. Revenue
& Customs Brief 16/2020 sets out HMRC’s position following the decision
by the Cheshire Centre for Independent Living (‘Cheshire’) to concede its
appeal in the Upper Tribunal.
The issue in the case was whether the payroll services were
directly connected with the provision of care and therefore exempt under the
welfare exemption. Although the First-tier Tribunal initially allowed
Cheshire’s claim for exemption ([2019] UKFTT 354 (TC)), HMRC appealed to the
Upper Tribunal.
Cheshire opted to withdraw its appeal in the Upper Tribunal.
This means that the First-tier Tribunal’s decision has been overturned and it
is not possible to rely on that decision as determinative. Cases for claims to
exemption where the facts are materially similar to those in the Cheshire case
will be rejected.
In a later application ([2020] UKUT 275 (TCC)), Cheshire was
able to recover some of its costs associated with the appeal on grounds that
HMRC had unreasonably failed to run what turned out to be its winning argument
sooner. That failure had resulted in Cheshire incurring significant costs
unnecessarily.
