Implications of the Regulation of Care Act 2013
Welfare services are services which are directly connected to -
- the provision of care, treatment or instruction designed to promote the physical or mental welfare of elderly, sick, distressed or disabled persons;
- the care and protection of children and young persons; or
- the provision of spiritual welfare by a religious institution as part of a course of instruction or a retreat (it must not be designed primarily to provide recreation or a holiday).
Supplies of welfare services, and certain goods supplied in connection with those services, are only exempt from VAT when made by the following specific providers -
- charities;
- public bodies; and
- state-regulated private welfare institutions or agencies.
There has not previously been a regulatory body for some of the welfare services which are provided in the Isle of Man, and Customs and Excise has allowed the exemption to apply to those private institutions or agencies where no state regulation had been established.
However, under the Regulation of Care Act 2013, which came into operation on 2 January 2014, there will be a requirement for those providing welfare services to register with the Department of Social Care to continue to benefit from the VAT exemption.
There will be a transitional period of 18 months until 30 June 2015, during which Customs and Excise will allow the exemption of services from VAT to continue if the registration process with the Department of Social Care’s Registration and Inspection Unit has not been completed. After that time, if the institution or agency is not registered with that Department, any supplies of welfare services that are made will be subject to the standard rate of VAT, and the institution or agency may be required to register for VAT with Customs and Excise.
Further information about the type of welfare services which can be exempt from VAT can be found inPublic Notice 701/2 Welfare, or you can contact the VAT Advice Centre on 648130 or byemail.
