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 Monday-Friday 08:45 - 17:15

FOLDING CRUTCHES


Registered address: Keynor Farm, Chalk Lane, Sidlesham, Chichester PO20 7LL



VAT charged on crutches

VAT number GB865831590

The World of VAT and its apportionment is a very dark and murky place. The onus being on the supplier to prove that the customer was eligible to purchase the item with a zero rating.

To give you an example. A few years ago we supplied some items which were going to be used for the first Heart Valve operations in Uganda. The items were being exported outside the EU, therefore no VAT should be charged. They were going to be used on chronically sick patients, therefore no VAT should be charged. They were also purchase by a charity, therefore no VAT should be charged.

The HMRC inspection did not see it in that straightforward a way. In fact even showing them the newspaper cuttings did not help our cause.

Yes we supply products to the majority of Cardiac Units in the UK. Yes I can confirm that all those centres pay VAT, as that’s the law.

We have included the guidance that the HMRC gives with regard to zero rating of goods.

Introduction

1.1 What’s this notice about?

This notice explains:

·        which goods and services for disabled people are zero rated for VAT

·        which goods and services for older people are reduced rated for VAT

·        the declaration your customer should give to you

It’s been rewritten to improve readability.

There are now links to customer helpsheets and separate links to eligibility declarations.

HM Revenue and Customs (HMRC) has added information about the reduced rate for certain mobility products.

HMRC has clarified the information about what goods and services are eligible for relief.

This notice and others mentioned are available on GOV.UK.

1.2 Who should read this notice?

You should read this notice if you supply:

·        goods and services to disabled people

·        goods and services to charities which serve the needs of disabled people

·        mobility aids to people 60 or over

1.3 Terminology

VAT law refers to people who are ‘handicapped’ and to certain goods designed for severe ‘abnormality’ and for ‘invalids’. HMRC accepts that these terms aren’t now generally used and can sometimes cause offence. HMRC use them in this notice only where it’s essential to accurately reflect the wording of the law.

1.4 What law covers this notice?

The VAT Act 1994:

·        Section 30 holds that goods and services specified in Schedule 8 to the Act are zero rated

·        Section 29A holds that goods and services specified in Schedule 7A to the Act are reduced rated

·        Schedule 8, Group 12 (as amended by SI 1997/2744, SI 2000/805, 2001/754, 2002/1397 and 2002/2813) specifies the zero-rated goods and services explained in this notice

·        Schedule 7A, Group 10 specifies the reduced-rated goods and services explained in this notice

2.When to zero rate goods and services for disabled people

2.1 When can supplies be zero rated?

Supplies of goods and services are only zero rated when all of the following conditions are met:

·        the customer is eligible to purchase supplies at the zero rate - see Section 3

·        the goods are for the personal or domestic use of the customer - see paragraph 3.4

·        the goods and services are eligible to be supplied at the zero rate - see paragraph 2.4

2.2 Do customers get a refund of VAT from HMRC?

No. Zero rating works by the supplier not charging VAT.

If you charge VAT incorrectly, please make an adjustment to your VAT records and refund the VAT to your customer. Further details of how this is done are in VAT Notice 700/45: how to correct VAT errors and make adjustments or claims.

HMRC can’t make refunds directly to your customers.

2.3 Who decides whether goods or services qualify for zero rating?

You, the supplier, are responsible for making sure that all the conditions for zero rating are met.

You may not know whether the equipment or appliance is designed solely for use by disabled persons and eligible for VAT relief. In such cases, it may help if you get written confirmation of the designer’s intention or the design specification of the product from the manufacturer.

HMRC won’t ordinarily provide binding VAT rulings to a retailer or distributor on the eligibility of specific items for VAT relief. See paragraph 4.5.3.

2.4 Are all goods and services for disabled people zero rated?

No. The information below provides a summary of the goods and services that can be zero rated and where in this notice the details can be found:

·        adaptation of goods - paragraph 5.4

·        adapted motor vehicles - paragraph 4.1

·        boats - paragraph 4.4

·        building works:

·        ramps, widening doorways and passsages - paragraph 6.2

·        bathrooms, washrooms and lavatories - paragraph 6.3 and paragraph 6.4

·        lifts - paragraph 6.6

·        preparatory, restoration and making goods - paragraph 6.6

·        goods supplied in connection with the above construction services - paragraph 6.8

·        grant-funded building work - paragraph 6.9

·        emergency alarm call systems - Section 7

·        hydrotherapy pools - paragraph 4.11

·        installation of goods - paragraph 5.1

·        low vision aids - paragraph 4.8

·        medical and surgical appliances - paragraph 4.2

·        mobility scooters - paragraph 4.10

·        other equipment and appliances designed solely for use by disabled people - paragraph 4.5

·        parts and accessories - paragraph 4.9

·        repair and maintenance of goods - paragraph 5.2

·        specialist adjustable beds, chair lifts, hoists and sanitary devices - paragraph 4.3

·        specialist computer devices - paragraph 4.6

3.Customer eligibility

3.1 Who can purchase zero-rated goods and services?

VAT reliefs for disabled people aren’t means-tested. They’re not dependent on the benefits a disabled person may or may not get and a person doesn’t have to be registered disabled in order to qualify. You can only zero rate supplies to:

·        handicapped people - see paragraph 3.2

·        charities - see paragraph 3.3

As a supplier you should take reasonable steps to check that your customer is eligible to receive your goods or services at the zero rate.

3.2 Supplies to handicapped people

You can only zero rate supplies to handicapped people when:

·        the person is ‘chronically sick or disabled’

·        the goods or services are eligible for VAT relief - see Section 4

·        the goods and services are purchased or acquired for their personal or domestic use - see paragraph 3.4

3.2.1 What does ‘chronically sick or disabled’ mean?

A person is ‘chronically sick or disabled’ if he/she is a person with a:

·        physical or mental impairment which has a long-term and substantial adverse effect upon his/her ability to carry out everyday activities

·        condition which the medical profession treats as a chronic sickness, such as diabetes

It doesn’t include an elderly person who’s not disabled or chronically sick or any person who’s only temporarily disabled or incapacitated, such as with a broken limb.

If a parent, spouse or guardian acts on behalf of a ‘chronically sick or disabled’ person, your supply is treated as being made to that ‘chronically sick or disabled’ person.

HMRC can’t offer any specific advice about whether or not any particular individual customer is chronically sick or disabled. See paragraph 3.6 and paragraph 3.9 for further information about customer eligibility.

3.2.2 Terminology

The term ‘disabled’ is used throughout this notice and means ‘handicapped’ or ‘disabled or chronically sick’.

3.3 Supplies to charities

You can’t zero rate all of the goods and services listed at paragraph 2.4 to all charities. You should, therefore, take extra care in checking that a charity is eligible for VAT relief before zero rating your supply.

Supplies of goods listed at paragraph 2.4 to charities will only qualify for VAT relief where the goods are made available by the charity to a disabled person for their personal or domestic use - see paragraph 3.4.

There are certain other circumstances when supplies of goods listed at paragraph 2.4will qualify for VAT relief - see VAT Notice 701/1: charities and VAT Notice 701/6: charity funded equipment for medical, veterinary etc uses.

3.3.1 What’s a charity?

Charities are non-profit distributing bodies established to advance education, advance religion, relieve poverty, sickness or infirmity or carry out certain other activities beneficial to the community.

For tax purposes, HMRC accepts that bodies have charitable status when they’re registered with the Charity Commission, or are recognised as a charity by HMRC. Not all non-profit making organisations are charities. Charities claiming VAT relief can demonstrate ‘charitable status’ with their Charity Commission registration number or with HMRC’s letter confirming charitable status. Charities that are not registered with the Charity Commission or don’t have HMRC’s letter should contact us to apply for recognition. Find out how to apply in the charities and tax guidance.

Further information on VAT reliefs available for charities is contained in VAT Notice 701/1: charities.

3.4 What does for ‘domestic or personal use’ mean?

‘Domestic or personal use’ means that the supply is needed specifically for the use of a disabled individual or series of disabled individuals.

The following are excluded from the term ‘domestic or personal use’, and not eligible for VAT relief:

·        goods and services used for business purposes

·        supplies of eligible goods made widely available for a whole group of people to use as they wish, for example, a stair lift installed in a charity building and made available for the general use or convenience of all those chronically sick or disabled persons who might need it, rather than for the personal use of specified individuals

·        goods and services supplied to:

·        an in patient or resident of a hospital or nursing home

·        any person attending the premises of a hospital or nursing home for care or treatment

·        any other person or commercial establishment, with the exception of a charity, where the goods are for use by, or in connection with, care provided to an in patient or resident of a health institution or to a patient whilst attending the premises of a health institution where the items are intended for use in the care or treatment provided in the relevant hospital, nursing home or health institution - for more information see VAT Notice 701/31 Health and Care institutions

3.5 Can anyone pay for the eligible goods and services?

As a general rule, yes.

There are, however, special rules that apply to supplies of certain types of equipment paid for or arranged by the National Health Service (NHS), non-charitable hospitals or certain other non-charitable institutions that provide nursing or residential care. For further information on these rules please see VAT Notice 701/31 Health and care institutions.

3.6 What evidence should I hold to show my customer is eligible?

HMRC doesn’t supply an ‘exemption certificate’ to the customer for this purpose. However, HMRC recommends that you get a written declaration from each customer confirming that the person is entitled to VAT relief. This should contain sufficient information to demonstrate that a customer fulfils all the criteria for eligibility. HMRCcan’t say whether a person is chronically sick or disabled.

The declaration should be separate, or clearly distinguishable from, any order form or invoice against which the goods or services are supplied.

A customer signing an order shouldn’t automatically be signing a declaration of eligibility for VAT relief.

There’s a suggested template declaration form that may be copied or otherwise reproduced by you or the customer.

There’s no need to get such a declaration from a disabled customer who’s purchasing eligible goods or services funded by the Disabled Student’s Allowance (DSA). This is because only eligible persons are entitled to DSA. Please retain evidence that the goods or services were funded by DSA.

3.7 What if a customer can’t make a written declaration?

It may not always be possible for a disabled person to sign a declaration, for example, if the person is a child or can’t write. In such cases, the signature of a parent, guardian, doctor or another responsible person is acceptable on the declaration.

3.8 Can I accept electronic declarations?

Yes. You can accept electronic declarations received, for example over the internet or by fax. Not all electronic declarations will have the means to incorporate a signature. In these circumstances it’s important that you retain evidence of the origin of the document, such as the email message incorporating the sender’s address.

As with paper declarations electronic ones should be distinguishable from an order form or invoice. Please retain these records for the same period as your general VAT accounts and records, and if held electronically, please check they’re capable of being produced in hard copy.

3.9 Use and misuse of declaration forms

A declaration is only a statement that your customer is entitled to receive zero-rated goods and services and what he will use them for. It doesn’t mean that the goods and services themselves fulfil all the conditions for zero rating.

You can ask for further evidence of eligibility to support your customer’s declaration. If you believe an eligibility declaration to be inaccurate or untrue, please don’t zero rate your supply. You should also take care that procedures, forms and literature don’t encourage or lead customers to make such a declaration. There are penalties for knowingly accepting false declarations and for fraudulent evasion of VAT.

 

 VAT charged on crutches

VAT number GB865831590

The World of VAT and its apportionment is a very dark and murky place. The onus being on the supplier to prove that the customer was eligible to purchase the item with a zero rating.

To give you an example. A few years ago we supplied some items which were going to be used for the first Heart Valve operations in Uganda. The items were being exported outside the EU, therefore no VAT should be charged. They were going to be used on chronically sick patients, therefore no VAT should be charged. They were also purchase by a charity, therefore no VAT should be charged.

The HMRC inspection did not see it in that straightforward a way. In fact even showing them the newspaper cuttings did not help our cause.

Yes we supply products to the majority of Cardiac Units in the UK. Yes I can confirm that all those centres pay VAT, as that’s the law.

We have therefore taken the decision that it is a lot easier to stay on the correct side of the tax man by charging VAT on all the crutches that are supplied in the UK and Europe. With that we realise that we have to keep our prices as low as we possibly can in order to be competitive.

We have included the guidance that the HMRC gives with regard to zero rating of goods.

Introduction

1.1 What’s this notice about?

This notice explains:

·        which goods and services for disabled people are zero rated for VAT

·        which goods and services for older people are reduced rated for VAT

·        the declaration your customer should give to you

It’s been rewritten to improve readability.

There are now links to customer helpsheets and separate links to eligibility declarations.

HM Revenue and Customs (HMRC) has added information about the reduced rate for certain mobility products.

HMRC has clarified the information about what goods and services are eligible for relief.

This notice and others mentioned are available on GOV.UK.

1.2 Who should read this notice?

You should read this notice if you supply:

·        goods and services to disabled people

·        goods and services to charities which serve the needs of disabled people

·        mobility aids to people 60 or over

1.3 Terminology

VAT law refers to people who are ‘handicapped’ and to certain goods designed for severe ‘abnormality’ and for ‘invalids’. HMRC accepts that these terms aren’t now generally used and can sometimes cause offence. HMRC use them in this notice only where it’s essential to accurately reflect the wording of the law.

1.4 What law covers this notice?

The VAT Act 1994:

·        Section 30 holds that goods and services specified in Schedule 8 to the Act are zero rated

·        Section 29A holds that goods and services specified in Schedule 7A to the Act are reduced rated

·        Schedule 8, Group 12 (as amended by SI 1997/2744, SI 2000/805, 2001/754, 2002/1397 and 2002/2813) specifies the zero-rated goods and services explained in this notice

·        Schedule 7A, Group 10 specifies the reduced-rated goods and services explained in this notice

2.When to zero rate goods and services for disabled people

2.1 When can supplies be zero rated?

Supplies of goods and services are only zero rated when all of the following conditions are met:

·        the customer is eligible to purchase supplies at the zero rate - see Section 3

·        the goods are for the personal or domestic use of the customer - see paragraph 3.4

·        the goods and services are eligible to be supplied at the zero rate - see paragraph 2.4

2.2 Do customers get a refund of VAT from HMRC?

No. Zero rating works by the supplier not charging VAT.

If you charge VAT incorrectly, please make an adjustment to your VAT records and refund the VAT to your customer. Further details of how this is done are in VAT Notice 700/45: how to correct VAT errors and make adjustments or claims.

HMRC can’t make refunds directly to your customers.

2.3 Who decides whether goods or services qualify for zero rating?

You, the supplier, are responsible for making sure that all the conditions for zero rating are met.

You may not know whether the equipment or appliance is designed solely for use by disabled persons and eligible for VAT relief. In such cases, it may help if you get written confirmation of the designer’s intention or the design specification of the product from the manufacturer.

HMRC won’t ordinarily provide binding VAT rulings to a retailer or distributor on the eligibility of specific items for VAT relief. See paragraph 4.5.3.

2.4 Are all goods and services for disabled people zero rated?

No. The information below provides a summary of the goods and services that can be zero rated and where in this notice the details can be found:

·        adaptation of goods - paragraph 5.4

·        adapted motor vehicles - paragraph 4.1

·        boats - paragraph 4.4

·        building works:

·        ramps, widening doorways and passsages - paragraph 6.2

·        bathrooms, washrooms and lavatories - paragraph 6.3 and paragraph 6.4

·        lifts - paragraph 6.6

·        preparatory, restoration and making goods - paragraph 6.6

·        goods supplied in connection with the above construction services - paragraph 6.8

·        grant-funded building work - paragraph 6.9

·        emergency alarm call systems - Section 7

·        hydrotherapy pools - paragraph 4.11

·        installation of goods - paragraph 5.1

·        low vision aids - paragraph 4.8

·        medical and surgical appliances - paragraph 4.2

·        mobility scooters - paragraph 4.10

·        other equipment and appliances designed solely for use by disabled people - paragraph 4.5

·        parts and accessories - paragraph 4.9

·        repair and maintenance of goods - paragraph 5.2

·        specialist adjustable beds, chair lifts, hoists and sanitary devices - paragraph 4.3

·        specialist computer devices - paragraph 4.6

3.Customer eligibility

3.1 Who can purchase zero-rated goods and services?

VAT reliefs for disabled people aren’t means-tested. They’re not dependent on the benefits a disabled person may or may not get and a person doesn’t have to be registered disabled in order to qualify. You can only zero rate supplies to:

·        handicapped people - see paragraph 3.2

·        charities - see paragraph 3.3

As a supplier you should take reasonable steps to check that your customer is eligible to receive your goods or services at the zero rate.

3.2 Supplies to handicapped people

You can only zero rate supplies to handicapped people when:

·        the person is ‘chronically sick or disabled’

·        the goods or services are eligible for VAT relief - see Section 4

·        the goods and services are purchased or acquired for their personal or domestic use - see paragraph 3.4

3.2.1 What does ‘chronically sick or disabled’ mean?

A person is ‘chronically sick or disabled’ if he/she is a person with a:

·        physical or mental impairment which has a long-term and substantial adverse effect upon his/her ability to carry out everyday activities

·        condition which the medical profession treats as a chronic sickness, such as diabetes

It doesn’t include an elderly person who’s not disabled or chronically sick or any person who’s only temporarily disabled or incapacitated, such as with a broken limb.

If a parent, spouse or guardian acts on behalf of a ‘chronically sick or disabled’ person, your supply is treated as being made to that ‘chronically sick or disabled’ person.

HMRC can’t offer any specific advice about whether or not any particular individual customer is chronically sick or disabled. See paragraph 3.6 and paragraph 3.9 for further information about customer eligibility.

3.2.2 Terminology

The term ‘disabled’ is used throughout this notice and means ‘handicapped’ or ‘disabled or chronically sick’.

3.3 Supplies to charities

You can’t zero rate all of the goods and services listed at paragraph 2.4 to all charities. You should, therefore, take extra care in checking that a charity is eligible for VAT relief before zero rating your supply.

Supplies of goods listed at paragraph 2.4 to charities will only qualify for VAT relief where the goods are made available by the charity to a disabled person for their personal or domestic use - see paragraph 3.4.

There are certain other circumstances when supplies of goods listed at paragraph 2.4will qualify for VAT relief - see VAT Notice 701/1: charities and VAT Notice 701/6: charity funded equipment for medical, veterinary etc uses.

3.3.1 What’s a charity?

Charities are non-profit distributing bodies established to advance education, advance religion, relieve poverty, sickness or infirmity or carry out certain other activities beneficial to the community.

For tax purposes, HMRC accepts that bodies have charitable status when they’re registered with the Charity Commission, or are recognised as a charity by HMRC. Not all non-profit making organisations are charities. Charities claiming VAT relief can demonstrate ‘charitable status’ with their Charity Commission registration number or with HMRC’s letter confirming charitable status. Charities that are not registered with the Charity Commission or don’t have HMRC’s letter should contact us to apply for recognition. Find out how to apply in the charities and tax guidance.

Further information on VAT reliefs available for charities is contained in VAT Notice 701/1: charities.

3.4 What does for ‘domestic or personal use’ mean?

‘Domestic or personal use’ means that the supply is needed specifically for the use of a disabled individual or series of disabled individuals.

The following are excluded from the term ‘domestic or personal use’, and not eligible for VAT relief:

·        goods and services used for business purposes

·        supplies of eligible goods made widely available for a whole group of people to use as they wish, for example, a stair lift installed in a charity building and made available for the general use or convenience of all those chronically sick or disabled persons who might need it, rather than for the personal use of specified individuals

·        goods and services supplied to:

·        an in patient or resident of a hospital or nursing home

·        any person attending the premises of a hospital or nursing home for care or treatment

·        any other person or commercial establishment, with the exception of a charity, where the goods are for use by, or in connection with, care provided to an in patient or resident of a health institution or to a patient whilst attending the premises of a health institution where the items are intended for use in the care or treatment provided in the relevant hospital, nursing home or health institution - for more information see VAT Notice 701/31 Health and Care institutions

3.5 Can anyone pay for the eligible goods and services?

As a general rule, yes.

There are, however, special rules that apply to supplies of certain types of equipment paid for or arranged by the National Health Service (NHS), non-charitable hospitals or certain other non-charitable institutions that provide nursing or residential care. For further information on these rules please see VAT Notice 701/31 Health and care institutions.

3.6 What evidence should I hold to show my customer is eligible?

HMRC doesn’t supply an ‘exemption certificate’ to the customer for this purpose. However, HMRC recommends that you get a written declaration from each customer confirming that the person is entitled to VAT relief. This should contain sufficient information to demonstrate that a customer fulfils all the criteria for eligibility. HMRCcan’t say whether a person is chronically sick or disabled.

The declaration should be separate, or clearly distinguishable from, any order form or invoice against which the goods or services are supplied.

A customer signing an order shouldn’t automatically be signing a declaration of eligibility for VAT relief.

There’s a suggested template declaration form that may be copied or otherwise reproduced by you or the customer.

There’s no need to get such a declaration from a disabled customer who’s purchasing eligible goods or services funded by the Disabled Student’s Allowance (DSA). This is because only eligible persons are entitled to DSA. Please retain evidence that the goods or services were funded by DSA.

3.7 What if a customer can’t make a written declaration?

It may not always be possible for a disabled person to sign a declaration, for example, if the person is a child or can’t write. In such cases, the signature of a parent, guardian, doctor or another responsible person is acceptable on the declaration.

3.8 Can I accept electronic declarations?

Yes. You can accept electronic declarations received, for example over the internet or by fax. Not all electronic declarations will have the means to incorporate a signature. In these circumstances it’s important that you retain evidence of the origin of the document, such as the email message incorporating the sender’s address.

As with paper declarations electronic ones should be distinguishable from an order form or invoice. Please retain these records for the same period as your general VAT accounts and records, and if held electronically, please check they’re capable of being produced in hard copy.

3.9 Use and misuse of declaration forms

A declaration is only a statement that your customer is entitled to receive zero-rated goods and services and what he will use them for. It doesn’t mean that the goods and services themselves fulfil all the conditions for zero rating.

You can ask for further evidence of eligibility to support your customer’s declaration. If you believe an eligibility declaration to be inaccurate or untrue, please don’t zero rate your supply. You should also take care that procedures, forms and literature don’t encourage or lead customers to make such a declaration. There are penalties for knowingly accepting false declarations and for fraudulent evasion of VAT.