Provider group campaigns for zero-rated VAT
30 June, 2020
On Monday 6 July, Simon Parker, founder of the Care Leaders Network and its 250-plus members, will write to the Chancellor of the Exchequer to ask for a change in legislation relevant to the tax status of care businesses so that they can reclaim Value Added Tax (VAT).
Currently for every pound that they spend, care businesses are charged 20% VAT but, unlike other businesses, are not able to claim back that 20%. This means that for every pound they spend, their actual outlay is £1.20. An amendment to current legislation would mean that care businesses would get help to ensure their sustainability during the Covid-19 pandemic.
Simon Parker hopes all care home business owners will contact him directly before he sends the letter on 6 July, to inform him that they would like to back the campaign. He has asked that business owners email him with:
- The number of homes they own
- The number of beds they have
- The size of their workforce
Simon Parker is contactable on – firstname.lastname@example.org
“Care home businesses have seen a massive spike in costs because of having to pay for things like additional Personal Protective Equipment at the same time as dealing with a significant decrease in income because they are unable to admit residents,” said Mr Parker.
“My fear is that without this support from the government, this immense financial pressure will become untenable for many businesses.”
Robert Kilgour, founder of Four Seasons Healthcare and now executive chairman of Renaissance Care has said that, while the Westminster Government and Scottish Government had given money to local authorities for distribution, much of it had not got to the frontline where it was needed.
“The proposed changes in legislation would be of great benefit to all UK care homes directly as they recover from Covid-19,” said Mr Kilgour.
“My contention is that when the money is spent by care homes, there is a sizeable net positive impact in boosting our ailing economy”.
Mr Parker’s letter to the Chancellor will read:
We understand that you may be reviewing options for VAT. As leaders of organisations providing care services we are grateful for the support the Government has provided in response to the Covid-19 pandemic.
As you will be aware care services, unlike other businesses, are unable to register for and reclaim VAT. The temporary zero rating of PPE products was welcome and indicates that you are aware of the burden that VAT places on care services.
We the undersigned would therefore urge you to zero rate all care services in order that supplies maybe purchased more efficiently and in line with other businesses without us having to pass on the additional costs of VAT to families paying for care.
We would welcome an appropriately socially distanced meeting or video call to discuss this proposal if that would assist.
Simon Parker, founder and the members of the Care Leaders Network.