I am taking on a new client a ltd company and the services that they will be providing will be domiciliary care and support in the community they are registered with the Care Quality Commission how it will work is that the social services will do an assessment on a client to see what support will be needed.
Then give the client the funds to pay for that support the client can then use which ever provider they wish. This is where my client will come in and offer to carry out the care and support for a fee.
What i would like to know would this service be VAT exempt as i believe they will hit the £70.000 turnover in the first year .
If it is then can my client register for vat if only to get back the vat paid out.
If the company is making only exempt supplies then they cannot register for VAT. If they are making mixed supplies, including zero rating, then they can
HTH
Bill
-- Edited by Wella on Sunday 24th of July 2011 10:30:52 AM
I do the bookkeeping & payroll for 3 care homes that provide the same services as the one that you have mentioned and are all CQC registered and can confirm that they are exempt
Thanks for your comments the client will not be running a care home they will be giving the services to the client in there own home.So lets say Mr Brown needs help to take a bath 3 times a week. My client sends someone to Mr Browns house to carry out this service and the fee is let say
£15.00 x 3 = 45.00would there be vat on this or is it exemptas its care
And if you conclude they are indeed exempt, then as others have said, you cannot reclaim the input VAT. (Although, if they are supplying both exempt and VATable supplies, they could register but then they will only be able to reclaim VAT on purchases relating to their VATable output)
The HMRC guideance states that it must be a qualifying institution. As Mark pointed out in his post, all his clients are CQC registered, so I am assuming that there is criteria that needs to be applied to the business. From your opening post I would say they do not need to register.
Your example would be exempt, and would not count towards the total 12 month rolling turnover figure.
Caveat to that is, if they supply and charge for supply of any of the non exempt products listed in my previous post, and the turnover of those alone excede the threshold (73K), then they need to register.
Thanks for that i have had a chat with my client today and they have now appointed there accountants. And we are all going to have a meeting next week so i will know a lot more as to what will be and wont be vat
I did reply to this earlier, but I'm not sure what happened to it (but I may have pressed the wrong button - am a newbie ;)
I have a similar client who provides care services and is registered under Care Quality Commision (formerly CSCI). After checking with both CSCI and VAT Notice 701/02 (Welfare), they ascertained that they were exempt from VAT (paragraph references below).
In their case, they fell within the definition of paragraph 3.3.2 (a state-regulated business) and they are providing services which fall into the definitions in paragraph 2.1.1 (in particular, they provide personal care, as assessed by an appropriately trained person).
The same definitions may apply to your client, which would mean they are exempt.
As others have said, if your client is exempt, they can't claim any input VAT, but if they provide other VATable goods/services, then they can claim the proportion of the input VAT that relates to VATable goods/services.
How does it work with some sectors that make exempt supplies but are allowed to register? A cattle farmer, for exemple, has exempt supplies (sale of carcasses to slaughtering houses), but can register for VAT and is always in a refund situation. Transport can be the same, my friend works for a transport company running 16 seater passenger transport, which is exempt, yet when they asked a VAT inspector to visit their premises to help them set up with their VAT. He advised them to register, and again they are in a refund situation every quarter.
I don't think that the supply of animals for the human food chain are exempt, in most cases they are zero rated (occassionaly standard rated)
Again transport I believe is zero rated not exempt, if the vehicle has more than 10 seats (private hire is standard rate).
Which means that a farmer can claim back VAT on purchases but does not pay out on sales. I have a client who has 10000 chickens for egg production, and always get severl 1000 refund each quarter
Bill
-- Edited by Wella on Tuesday 26th of July 2011 10:39:00 AM
Livestock for eventual human consumption is usually zero-rated rather than exempt. Hence the refund situation in that sector.
Passenger travel is usually either zero-rated or standard rated, depending on the purpose (and sometimes, where the travelling is from and to). (I'm excluding public transport here) Again, if a transport company's only makes zero-rated supplies, that will generate a refund situation.
I can't comment on your friend's company specifically; I've always understood it to be a general rule that people/companies etc... that only make totally exempt supplies can't register for VAT: http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm#1 and those who make a mix of VATable and exempt supplies have to apply the "partial exemption rules" (that I alluded to earlier, since you can only reclaim the input VAT relating to the VATable part of the supply).
Thx Louise
(Edit: Sorry, I got distracted doing something else, and left my reply hanging for a while in the middle. Had I noticed that Bill had replied in the meantime, I wouldn't have repeated the same information, sorry everyone)
-- Edited by Figurate on Tuesday 26th of July 2011 12:16:08 PM
