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In The Lilias Graham Trust (‘LGT’) v HMRC [2019] UKFTT 0552 TC07346, the First Tier Tribunal (FTT) concluded that a charity which assessed families referred to it by social services was supplying welfare services, therefore exemption applied.

LGT appealed on the basis that their supplies were to a Local Authority and not directly connected to children and hence not exempt services. The charity wished to benefit from input tax recovery and treated its services as taxable.

The FTT found that the essential purpose of the supplies made by LGT was to ensure that the child was better cared for and had optimal protection. The FTT decided that both are closely linked and directly connected with the protection of children as also to their care. Accordingly, the appellant made supplies of welfare services which are exempt from VAT. Therefore, there was no output tax chargeable on LGT’s invoices to the Local Authority and no input tax recovery on expenditure attributable to those exempt supplies.

The appeal was therefore allowed.

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The Lilias Graham Trust (‘LGT’) v HMRC