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In The Lilias Graham Trust v HMRC [2021] UKUT 36, the Upper Tribunal (UT) upheld the First Tier Tribunal's (FTT) decision that a charity's single supply was exempt for VAT as welfare services and the integral supply of accommodation could not be standard-rated.

The charity appealed the FTT's decision to uphold HMRC's argument that the single supply of accommodation and assessment services was exempt for VAT under Item 9, Group 7 Schedule 9 VATA 1994 welfare services directly connected to the care or protection of children.

Both parties agreed that the services provided at the residential assessment centre were a single supply and the FTT's decision on this was not in dispute. The charity instead appealed on their alternative case which was:

The UT considered the charity's arguments and held:

The appeal was dismissed.

The background to this case is that the charity initially had to register for VAT at the insistance of HMRC, who believed they were making standard-rated supplies. The change of position that now has HMRC arguing exempt supply means that the charity has been charging output VAT for many years. Conclusion of this case in favour of HMRC will see a refund of over £400,000 due. It will be interesting to see if this is repaid as it will have been collected, in the main, from local authorities.

Useful guides on this topic

Heath and Welfare: VAT
Goods and services related to medical care and welfare can fall within a number of VAT rate categories. Zero-rating normally takes priority, followed by reduced rating, exempt, and failing these, standard rated.

Mixed supplies: Single or multiple supply
Is a mixed supply a single or multiple supply for VAT purposes? What tests and case law apply?

External link

The Lilias Graham Trust v HMRC [2021] UKUT 36


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