VAT exemption for housing related support

Four YMCAs provided housing related support services to local authorities. The service users were vulnerable people who were homeless or about to become homeless. A key worker was assigned to each individual to guide them through a programme intended to help them to develop the life skills to live independently.

The taxpayers said the supplies were not exempt welfare services within VATA 1994 Sch 9 group 7 item 9. They argued that the services were taxable with the advantage that they could recover input tax.

The First-tier Tribunal concluded that the services were VAT exempt welfare services within item 9 note 6. The taxpayers appealed.

The Upper Tribunal considered first the nature of the supply. The taxpayers argued that the exemption did not apply because their services were supplied under contract to the local authority rather than being supplied directly to service users. The judges disagreed. They said nothing in...