As accountants specialising in the care sector, we have seen many instances where providers have incorrectly assumed that their service is exempt from VAT. However, this is not always correct, and an example of this scenario is unregulated Independent Supported Living (ISL) providers, that are in fact required to register for VAT and charge it at a Standard Rate of 20%.
This is because the exempt for VAT only applies to private bodies when they are state regulated. In this instance, state regulated means that you must be registered and approved by OFSET. Therefore, if you are an Independent Supported Living (ISL) provider that is not already registered for VAT and have revenues over £85,000 per annum, you may need to backdate this VAT registration as soon as possible.
To further complicate matters from October 2023 all private Independent Supported Living providers are required to register with OFSTED to continue trading legally. This means provider may need to register and deregister from VAT as part of this exercise.
For support correcting your accounting records and advice on how to deal with your local authority customers, please make contact.
