A consortium of home care providers is set to outline its strategy for the next stage of its campaign for an urgent change in the sector’s VAT regime.
All providers in the sector are being invited to attend a webinar, hosted by BBC presenter and Business Correspondent Ben Thompson on August 6, where the issues facing home care services and plans to lobby the government will be shared.
In May, six home care providers signed an open letter to the Chancellor of the Exchequer, Rishi Sunak, calling for social care services to become zero-rated for VAT.
This would mean providers would not charge VAT on services to the most vulnerable in society, but reclaim VAT on their expenses, such as PPE, utilities, rent and repairs.
The letter was co-ordinated by Alex Green, franchising director at Radfield Home Care; Ken Deary, CEO of Right at Home UK; Martin Jones, CEO of Home Instead Senior Care UK; Michelle Fenwick, franchise director of Heritage Healthcare; Yvonne Tomlinson, CEO of KarePlus; and Wayne Smith, finance director and acting managing director at Bluebird Care.
Lisa Fyfe, finance director at Caremark, has also since joined the campaign.
Deary and Jones conceived the idea for the consortium when VAT charges on PPE brought into sharp focus the inequity of social care’s VAT status.
Goods and services provided by regulated social care organisations are exempt from VAT, meaning that they do not charge VAT on their services.
However, their current VAT status means they cannot reclaim VAT on expenses.
Deary said: “Our sector is made up of many small, independent operators. Costs go up year and year and we operate under this punitive VAT regime that sees margins squeezed.
“Social care providers operate in a highly-regulated sector and as such there are many associated costs of running a business. Regulatory fees, training, office overheads to name but a few. And we were already facing increased financial pressures, even before COVID-19 with the cost of pension provision, National Living Wage increases to name but a few.”
The sector welcomed the temporary change to the VAT status of PPE during the pandemic, but says it needs to see a permanent change to the sector’s status.
Commenting on this and how changes could be made, Jones said: “Whilst we welcomed the temporary suspension of VAT on PPE which has been a huge help, we are urging the government to go a step further and make a wholesale change that will benefit clients and carers alike.
“As a sector we are really keen to reinvest any savings into delivering an even better service for our clients and to better support our carers.
“This would be through increasing rates of pay to carers, additional training opportunities, allowing carers to spend more time with their clients for those providers who are forced into delivering shorter duration calls.
“Providers would have more flexibility to invest in technology to support clients with items such as Raizer chairs, for example, becoming more commonplace.”
The consortium argues that home care providers should operate under the same VAT regime as mobility aid retailers, which serve practically the same client base, who are already zero rated.
Deary added: “The cost to the Treasury to change social care to zero rated would be relatively small annually, but it would make a significant contribution to keeping financially under pressure social care providers in business, both in the short and long term for the huge benefit of their clients, carers and, let’s not forget, the NHS.”