Currently, the law provides for a refund scheme for NHS bodies under section 41(3), Value Added Tax Act 1994 (VATA), however, no such relief is available to charities which provide palliative care. This disparity in treatment as between hospices and the NHS will be addressed in the Finance Act 2015, which will introduce section 33C and 33D to VATA, and will mean that such charities are able to claim refunds of VAT incurred in the furtherance of their non-business activities.
It is estimated that this will save the sector around £4m per year as well as leading to a lower administrative burden, as currently many hospices use structures, such as trading companies, to arrange their affairs in a tax efficient manner.
The definition of “palliative care charities” is to be taken from the legislation. The new legislation will have effect in relation to supplies made, and acquisitions and importations taking place, on or after 1 April 2015.
To read HMRC’s notice click here.