The response paper confirms the FRM is the preferred option with alternatives that would be quick to implement, such as simplifying the COS headings, needing to be an ongoing exercise. It identifies several specific areas to be considered for the design of the FRM potential reform if it is to be implemented:. Further engagement is required with stakeholders on the complex issues identified in the paper. A conclusion of the report is that it is more important to be prepared for any move to the FRM rather than a quick implementation.
The impact on accounting arrangements, systems, budgets, and cost planning being areas to consider for individual organisations. The paper acknowledges that the other reforms will need to be factored into the decision-making process and the importance of updates where reforms have been deferred for the NHS and other public sector organisations.
The repeal of the order is likely to affect NHS bodies that supply cars to their employees under salary sacrifice arrangements. The change in legislation is intended to ensure that Government Departments and the NHS can only recover VAT to the same extent as commercial entities.
The key points to be aware of for the NHS is that there is a consultation period for the draft legislation, the measure is to be effective from 21 October and it includes a transitional provision relating to supplies made under certain contracts entered before this date. HMRC are inviting views on the draft legislation and the following information has been published to assist with the change in the law with the existing VAT guidance in the process of being updated:.
The consultation closes at pm on 17 August and we would recommend NHS bodies that will be affected to respond with any views as requested:. Many social care providers have been disadvantaged by their VAT-exempt status in that they have been unable to claim back VAT paid for their operating costs. However, by assigning contractual responsibilities to a non-regulated associated VAT group member, a care provider is able to claim back VAT for costs associated with providing care for a publicly funded individual.
In essence, this means an NHS CCG or other commissioning funding body agrees to contract with a non-regulated entity which then subcontracts the care services to an associated registered and regulated social care provider. The legal basis for this is that the Care Act does not compel public funders to contract with regulated entities and so the charging for social care services falls outside the VAT exemption provided in Group 7, Schedule 9 of the VAT Act This legislative basis was originally used by public funders local authorities and NHS CCGs to engage care providers in fee negotiations in return for trading terms that were standard rated for VAT purposes as opposed to exempt.
Now established VAT practice in the sector, these arrangements have existed for around eight years and are undertaken with HMRC approvals in place. A significant concern for commissioning bodies has been contracting to procure social care services from non-regulated entities. Of further concern are the possible implications were HMRC to change its position in respect of these arrangements in the future.
Once approval in principle has been agreed for these arrangements between a commissioning body and the non-regulated contracting arm of the regulated provider organisation, Kieran Lynch writes to HMRC with full disclosure of the client, their proposed VAT group, their accounts, etc and seek HMRC approval for the purposes of restructuring their welfare services.
This provides reassurance for the contracting partners that the principle of legal certainty is in place and that HMRC has approved the arrangements. The benefits of VAT restructuring in the commissioning and provision of publicly funded social care services are that, while they are cost-neutral to the funding body and offer the potential for funder fee generation , the arrangements nevertheless help support care provider viability by sustaining provider cashflow.
By acting to counterbalance the effect of void payments coming to an end, VAT restructuring in respect of publicly funded services places the care sector in a stronger position to deliver these services and helps providers with their staff recruitment and retention challenges. As the care provider can recover VAT this reduces the overall cost in providing the services allowing the benefits to be passed on to the NHS.
Yes — the VAT rules are the same across the whole of the UK and whilst funding steams vary the basic principle applies which allows the savings to be passed on to the NHS. Numerous care providers have opted to use this funding model and the NHS is already benefitting from the reduced costs. In this section Temporary reduced-rate VAT on catering supplies and accommodation.
Catering Systems — VAT assurance and compliance The relevant staff will need to be aware of the changes and for assurance purposes these would be areas to consider where there have been issues for NHS bodies: Confectionery items. Take-away cold drinks such as carbonated drinks, fruit juices and water that are consumed off canteen premises and that are not eligible for zero-rating e.
HMRC Consultations The government has a year strategy to build a trusted, modern tax administration system. Partial exemption and Capital goods The government released a call for evidence on the simplification of the VAT partial exemption and capital goods scheme regimes. Find out more. Forensic cash recovery services — Dedicated to digging deep into the detail of payments made and recovering cash from overpayments, our detailed reviews of payroll and non pay data are all delivered on a contingent basis.
We identify potential savings and then our specialist team pursue cases as agreed with clients in order to recover the amounts overpaid. Our unique direct engagement service, run in partnership with PwC, STAFF flow offers improved controls, better governance, increased transparency, greater compliance and lower costs.
It puts NHS trusts in control of hiring arrangements and improves visibility and control over agency spend. This means that our well trained and experienced team of advisors are well equipped to offer specialist financial savings advice and deliver exceptional levels of service. These services are performed by our team of experts who have all completed extensive NHS VAT specific training programmes, gained a wealth of experience, and are supported by a strong technical team which includes former HMRC inspectors.
They provide immediate updates on new rulings, make current HMRC interpretations known, and ensure that best practice policies are shared across the business so that our team is always up to date, reducing your risks and maximising your VAT recovery. Our regular VAT compliance service. Working as part of your team, our experienced advisor ensures that they understand your challenges and vision and they are best placed to offer effective pro-active advice and support.
In addition to delivering the innovative VAT services we also provide specific, strategic consultancy to our clients and as a market leading provider we are constantly striving to find new initiatives to enable the NHS to maximise savings and efficiencies. As the NHS has become more VAT aware, we have increasingly focused on areas of consultancy where we can provide added value. The NHS has been expanding into many new areas such as new types of contract and joint ventures and we have been at the forefront of advising and assisting with these new areas to ensure they are managed in a VAT efficient and compliant manner.
To ensure we are there when you need us the most, we have a dedicated free NHS helpline that you can contact when queries arise. This prevents VAT errors accumulating between visits. We offer extensive, free, CPD accredited monthly webinar training and a world-class online training portal.
Our new modular Training Portal allows instant access so staff can train whenever it is convenient for them. Our training support is designed to increase internal knowledge, self-sufficiency, and confidence.
If you already have a Liaison Financial Training Portal account, please log in here. Speak with your Liaison Financial advisor or register your interest to find out more here. The processing of financial payments is an integral and vital element within every organisation. Our AP review offers a comprehensive, risk-free, end-to-end service to identify and recover savings.
We examine and interrogate AP related transactional information to identify erroneous payments. Irregularities can occur in many forms, including but not limited to duplicate payments, duplicate charges, and unallocated payments. Using a combination of AI software and human expertise, our specialists complete a variety of additional checks to those traditionally included in software solution and NFI reviews.
By doing so, this allows us to consistently uncover anomalies which would otherwise go unidentified. In one seamless motion, our team of recovery specialists liaise directly with suppliers to resolve each anomaly in an effective and efficient manner. Our fees are based on the savings achieved providing real value for money, an additional layer of financial safeguarding, and independent assurance over the robustness of your internal control processes.
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