Post by Denise on Jan 10, 2011 10:34:38 GMT
Media Release (UKHCA)
4th January 2011
For Immediate Release
Impact of VAT increase on homecare services
Commenting on today’s 2.5% increase in the standard rate of VAT, the United Kingdom Homecare Association notes that the supply of welfare services provided by the majority of state-registered domiciliary care agencies is exempt from VAT and will not therefore increase in price as a direct result of the rate increase (See notes 3 and 4).
However, VAT-exemption means that most homecare providers are unable to reclaim the tax they themselves pay on goods and services purchased to run their businesses. This would not be the case if the supply of welfare services was zero-rated for VAT purposes.
Today’s VAT increase will therefore inevitably increase homecare providers’ costs, including the price of fuel for journeys between service users’ homes. Some providers will need to seek reasonable increases in their charges to local authorities and private individuals to continue to provide their services.
UKHCA Chair Mike Padgham said:
“It is fortunate that the homecare sector’s VAT exemption will protect people purchasing its services. However, today’s tax increase signals the need for Government to consider applying zero-rating to our services, to protect the public from indirect increases in the cost of care.
“In addition, if local authorities and the NHS genuinely care about high-quality services, they must also consider providers’ real costs when renegotiating contract prices with the independent and voluntary sectors.”
Ends.
Notes for Editors
1. The United Kingdom Homecare Association (UKHCA) is the professional association for 1,900 domiciliary care providers in Great Britain and Northern Ireland. The mission of UKHCA is to represent its members and to promote and support the sustainable provision of high standard homecare.
2. UKHCA represents 33% of independent and voluntary sector providers across the UK. Its member organisations are estimated to provide 1.7 million hours of care each week, valued at £1.08 billion per year, and delivered to 115,000 service users at any one time.
3. The VAT status of welfare services is summarized in HM Revenue and Customs’ Notice 701/2, available from customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageExcise_ShowContent&id=HMCE_PROD_009852&propertyType=document.
4. This media release is intended for information purposes only and is not intended as a substitute for appropriate legal or tax advice. Those affected by the issues covered in this media release should take legal or tax advice specific to their situation before taking or refraining from action. United Kingdom Homecare Association Limited accepts no liability for organisations or others acting or refraining from acting solely on the information contained in this release.
5. A high resolution royalty-free image of Mike Padgham, quoted in this release is available from: www.ukhca.co.uk/images/highres/mikepadghamhires1.jpg
6. UKHCA’s website can be found at www.ukhca.co.uk.
7. For further information please contact:
Colin Angel, Head of Policy and Communication, UKHCA
Direct Line: 020 8288 5297
Mobile: 07920 788993
E-mail: colin.angel@ukhca.co.uk.
Kind regards
UKHCA Policy and Communications Team
4th January 2011
For Immediate Release
Impact of VAT increase on homecare services
Commenting on today’s 2.5% increase in the standard rate of VAT, the United Kingdom Homecare Association notes that the supply of welfare services provided by the majority of state-registered domiciliary care agencies is exempt from VAT and will not therefore increase in price as a direct result of the rate increase (See notes 3 and 4).
However, VAT-exemption means that most homecare providers are unable to reclaim the tax they themselves pay on goods and services purchased to run their businesses. This would not be the case if the supply of welfare services was zero-rated for VAT purposes.
Today’s VAT increase will therefore inevitably increase homecare providers’ costs, including the price of fuel for journeys between service users’ homes. Some providers will need to seek reasonable increases in their charges to local authorities and private individuals to continue to provide their services.
UKHCA Chair Mike Padgham said:
“It is fortunate that the homecare sector’s VAT exemption will protect people purchasing its services. However, today’s tax increase signals the need for Government to consider applying zero-rating to our services, to protect the public from indirect increases in the cost of care.
“In addition, if local authorities and the NHS genuinely care about high-quality services, they must also consider providers’ real costs when renegotiating contract prices with the independent and voluntary sectors.”
Ends.
Notes for Editors
1. The United Kingdom Homecare Association (UKHCA) is the professional association for 1,900 domiciliary care providers in Great Britain and Northern Ireland. The mission of UKHCA is to represent its members and to promote and support the sustainable provision of high standard homecare.
2. UKHCA represents 33% of independent and voluntary sector providers across the UK. Its member organisations are estimated to provide 1.7 million hours of care each week, valued at £1.08 billion per year, and delivered to 115,000 service users at any one time.
3. The VAT status of welfare services is summarized in HM Revenue and Customs’ Notice 701/2, available from customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageExcise_ShowContent&id=HMCE_PROD_009852&propertyType=document.
4. This media release is intended for information purposes only and is not intended as a substitute for appropriate legal or tax advice. Those affected by the issues covered in this media release should take legal or tax advice specific to their situation before taking or refraining from action. United Kingdom Homecare Association Limited accepts no liability for organisations or others acting or refraining from acting solely on the information contained in this release.
5. A high resolution royalty-free image of Mike Padgham, quoted in this release is available from: www.ukhca.co.uk/images/highres/mikepadghamhires1.jpg
6. UKHCA’s website can be found at www.ukhca.co.uk.
7. For further information please contact:
Colin Angel, Head of Policy and Communication, UKHCA
Direct Line: 020 8288 5297
Mobile: 07920 788993
E-mail: colin.angel@ukhca.co.uk.
Kind regards
UKHCA Policy and Communications Team