VAT groups and anti-avoidance
HMRC have published Tax Avoidance Spotlight 70 ‘VAT grouping structure arrangements used by care providers’, highlighting tax avoidance arrangements used by state-regulated care providers to reclaim VAT. The VAT legislation exempts supplies of welfare services where they are made by either a charity or a state-regulated care provider. The impact for the charity or state-regulated care provider is that they are unable to recover any VAT which relates to these supplies. The arrangement identified in Spotlight 70 is intended to work as follows: An unregulated entity forms a VAT group with the state-regulated care provider, or charity. Existing contracts for welfare services between [...]