How to make UK VAT claims on building a care home

UK VAT can now be claimed on building a care home.  If VAT has been paid on building a care home within the last four years then a VAT refund may be available.  This potential windfall follows Pennine NHS Trust winning their argument that construction of a care home was not similar to hospital (and therefore VATable) but akin to building a home (and properly zero rated).

This case has led to HMRC issuing a business brief – click here – clarifying that VAT should not be charged on construction of a building which is going to be the home for most of its residents.  If VAT has been paid on building a care home, the builder may now be able to issue a VAT credit note but – here’s the rub – only if charged within the last four years.

I find it quite irritating that costs of constructing a care home more than four years ago will suffer VAT as we won this very same argument in the High Court for Fenwood Developments in 2005.  That case compared the hallmarks of a hospital with those of a care home which seem mirrored by the Pennine decision.  How unfair then that VAT will be suffered on new care homes built through a period of more than 10 years without there being any way to remove the cost from the care sector.

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