Revenue & Customs Brief 16 (2020): ‘VAT liability of payroll services’ explains HMRC’s position following the decision by the Cheshire Centre for Independent Living to concede in the Upper Tribunal.

In the Cheshire Centre for Independent Living v HMRC TC7182 case, the FTT found that a supply of payroll services to disabled people employing personal assistants in their own home was so closely linked to the provision of welfare services that payroll charges were VAT exempt.

HMRC’s position is that the FTT had erred in law because:

HMRC appealed to the UT and introduced an entirely new ground of appeal which the taxpayer accepted and the case was settled in HMRC’s favour without a UT hearing.

There is no change to HMRC’s policy which is that these payroll services are not exempt welfare services.

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Revenue and Customs Brief 16 (2020): VAT liability of payroll services