VAT Recovery Within the Care Sector: The importance of correctly managing VAT Recovery through Contract Restructuring
It’s a well-publicized fact that the care sector in the UK is facing a major challenge in sustaining quality care services, given the rising costs of living, inadequate government funding, and the pressure of meeting regulatory requirements.
One way in which care providers have been looking to alleviate some of these pressures is by ensuring that they are maximizing their VAT recovery opportunities through Contract Restructuring, which allows them to reclaim input tax on a range of goods and services, such as staff training, building maintenance, energy costs, and even medical equipment, on an ongoing basis.
This article is designed to provide an insight into how you can make an effectual choice when considering which firm will be the most advantageous at guiding you through the Contract Restructuring process safely and securely. You may elect to task your accountant with the job… after all, they have the accounting information to hand for your company, so why not?
Well, it’s not as simple as it seems. Using someone that you trust with your financial affairs, who also claims to have the knowledge to undertake the work involved in correctly implementing Contract Restructuring for your business because they provide financial accountancy services, isn’t necessarily the right decision. You will no doubt have heard about the backlash in respect of R&D tax relief claims, many of which were handled by local accountancy firms who didn’t possess the required expertise to complete these claims, and which are now being investigated by HMRC, with a number of businesses at risk of facing penalties.
Contract Restructuring, if implemented correctly, is an intricate structure which requires in depth knowledge of VAT and the laws associated therewith; and the assurance of working alongside a team that has the expertise and experience in dealing with local authorities, commissioning groups and inevitably, HMRC.
As the care sector begins to accept Contract Restructuring as a means of managing costs effectively, many accountancy firms and financial advisors are coming forward and purporting to be VAT specialists in this area; and with an increasing number of suppliers offering this service, choosing the right firm can be overwhelming. However, when it comes to comparison, there are a few key details which identify the experts. Questions that should be raised & considered when your business chooses an indirect tax specialist to assist with implementing Contract Restructuring for a business include the following:
- Does the business have the administrative capability to document the restructure robustly and accurately (for HMRC purposes), including full disclosure to HMRC?
- Do they have the specialist tax knowledge combined with the commercial expertise to review, analyse and optimise input tax?
- Do they have solid relationships with key individuals within the local authorities and commissioning groups?
- Is the team experienced in handling contract novations with the appropriate contacts quickly & efficiently?
- Do vital documents that bind the companies together conform to legal and regulatory requirements?
- Do they have the necessary full legislative and regulatory knowledge required to carry out a sound, secure restructure, with the backing of eminent tax counsel and respected sector regulatory opinion?
- Does the business have a consistent and established trading history, with fully transparent business disclosure readily available?
- Will the business provide full implementation support, post restructuring?
As indirect tax specialists who have worked almost exclusively in the care sector since 2004, VAT Solutions are ideally placed to help you optimise what you currently have, plan sustainably for the future, and explore what is available to you going forward. With over 30 years of experience in the healthcare sector, we understand the unique pressures you are under and the challenges you face, and our service reflects that understanding; our clients are secure in the knowledge that they can rely on our corporate pedigree, due diligence and reputational record.
The potential offered to reclaim VAT on an ongoing basis through our Contract Restructuring service, plus its accompanying business efficiencies, provides operators with an often unexplored key to financial sustainability and future growth in this challenging environment.