LGT recently lost its Upper Tier Tribunal case in which it argued that the accommodation it provides was not covered by the welfare exemption and so should have been subject to VAT at the standard rate.
LGT argued that VAT was applicable to the accommodation services because applying the standard rate would improve LGT’s VAT recovery position, as exemption does not allow
recovery of VAT on costs associated with those supplies.
The case potentially affects all care providers that offer accommodation as part of their package of care services.
The decision states that the accommodation could not be disaggregated from the supply of the welfare as this was not a discrete supply – it was essential to the care
services being provided.
Therefore, this decision confirms both:
Further information on applying VAT to welfare services is available here.
Care providers often provide accommodation to users in order to facilitate their care, this can take many forms, e.g. residential care or supported living, and so this
case does lend clarity to the position with regard to these supplies.
Should you have any queries, please get in touch with Kieran Smith, Robert Warne or your usual Crowe VAT contact.
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