Respite Care: VAT
The question
To ask the Chancellor of the Exchequer, what assessment she has made of the potential impact of VAT on the affordability of respite day care services; and what assessment she has made of the adequacy of the reasons for the difference in VAT treatment between respite day care services and residential care homes.
Answered by Dan Tomlinson
Supplies of welfare services, including the provision of respite and residential care for people with permanent disabilities and dementia, are exempt from VAT if they are supplied by eligible bodies, such as public bodies or charities.
Some respite care may be provided by community interest companies (CICs). Because CICs are not charities in law, they must meet the criteria of being state-regulated in order to provide VAT-exempt care services. This is to ensure that the VAT relief is carefully targeted at private providers offering safe and high-quality welfare services.
The Government recognises that there are private organisations that bring value to the care sector without being regulated, but extending the VAT relief to include these would have to be carefully balanced against the risks that it poses.
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