Taxman backs down over home care tax after stinging protests

The move follows government proposals to clarify the contractual position of temporary workers supplied by employment bureaux which meant staff were contracted to the bureaux supplying them and not with the client hiring them.

Deloitte & Touche VAT partner John Kennedy said: ‘Customs has listened to genuine concerns raised by one of the most vulnerable sections of the community. It would always be better if that was enshrined in law rather than as an Extra Statutory Concession because if there was a dispute there could be problems.’

The increased VAT burden was expected to hit charities who hire care staff, office workers and other personnel through agencies hardest.

It was feared the move would signal a switch from care at home to residential care for both the elderly and the disabled.

Now, the concession should allow businesses providing home care services to exclude the salary and related costs of home care workers from the value of their supplies.

The government has recently sought to promote closer working with charities who also provide services to elderly and disabled people. Critics have highlighted the attraction of having charities undertake this work.

Without the £12bn voluntary sector’s involvement, the government would be forced to fund carers.’Provided we do not find in the detail that there is significant restriction or limitation, this is a very, very positive statement from Customs,’ Kennedy added.

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