Exemption does not apply to daycare services supplied by private bodies in England and Wales

HMRC has confirmed that the VAT exemption for welfare services does not apply to private welfare institutions or agencies which supply daycare services to vulnerable adults in England and Wales and are not state-regulated.

This comes in light of the Court of Appeal decision in the joint appeals of LIFE Services Ltd and The Learning Centre (Romford) Ltd [2020] STC 898 and the Supreme Court’s decision to refuse leave to appeal.

The provision of welfare services by private bodies that are not charities is exempt from VAT only if the body concerned is a state-regulated private welfare institution or agency (VATA 1994 Sch 9 group 7 item 9). Note (8) to group 7 defines ‘state-regulated’ as ‘approved licensed registered or exempted from registration by any minister or other authority pursuant to a provision of a public general Act’.

The Court of Appeal held that...