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Vat Exemption

Volume 400: debated on Tuesday 4 March 2003

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To ask the Chancellor of the Exchequer (1) if he has estimated the net change in value added tax revenue which would result from the proposed VAT exemption for welfare services provided by state-regulated private welfare agencies; [100099](2) what discussions officials from his Department have had with representatives of state-regulated private welfare agencies concerning the proposed VAT exemption for welfare services provided by state-regulated private welfare agencies; [100098](3) when the proposed VAT exemption for welfare services provided by state-regulated private welfare agencies will come into force. [100100]

To ask the Chancellor of the Exchequer (1) what estimate he has made of the net revenue implications of changes to VAT treatment of services connected with the care and protection of children and young people by independent fostering agencies; [100833](2) what notice was given to independent fostering agencies about changes to VAT treatment of services connected with the care and protection of children and young people and reclamation of VAT on inputs purchased. [100780]

The Government's decision at the end of last year to abolish VAT on essential care in the home will cut the cost of home care for many of the 60,000 people who currently buy in these services. Someone previously paying £400 a month for care could see a reduction of £40 in their bill as a result of these VAT changes, which have been discussed between officials and a wide range of organisations.The changes will cost an estimated £30 million per year, of which a negligible amount relates to services connected with the care and protection of children and young people by independent fostering agencies.Welfare services provided by state-regulated private welfare agencies can be exempt from 31 January. Independent fostering agencies, whose supplies are to local authorities, may choose to postpone changing the VAT treatment of their supplies until 1 April while they make the contractual and financial arrangements that are necessary for them to implement the change. This was announced in Customs and Excise business brief 01/03, issued on 20 January, and Customs additionally wrote to agencies on 24 and 30 January.