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HMRC internal manual

VAT Government and Public Bodies

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HM Revenue & Customs
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Other local authority activities: welfare: meals for the elderly

Meals

The National Assistance (Amendment) Act 1962 empowers local authorities to make arrangements for meals to be provided to the elderly. They can be provided in community halls for example, or be delivered to people at home. These are often referred to as ‘meals on wheels’.

Local authorities may use their own staff to provide the meals or buy them in from outside contractors. They may also use the services of voluntary organisations, such as the WRVS, to act as their agent in preparation and delivery.

The provision of meals to the elderly for a charge is non-business where it is provided as part of a package of care. Otherwise the supply is liable to VAT at the standard rate as a supply of catering. Normally it is non-business.

Any charge made to the local authority by an organisation for undertaking the meals on wheels service is taxable at the standard rate. This is regardless of whether the supply is below cost or whether it includes an incidental element of care provided to the recipient of the meal. However, the local authority can recover the VAT charged under section 33 (see VATGPB4000).

If the contractor arranges the provision of meals as agent of the authority section 47 of VAT Act 1994 applies. For further information see the Taxable person manual (VTAXPER) (external users can find the guidance at http://www.hmrc.gov.uk/manuals/vtaxpermanual/Index.htm). The contractor can then treat itself as both receiving and supplying the goods and services. For its part the local authority can recover the VAT it is charged by the contractor under section 33. Care should be taken to ensure that the authority does not recover VAT that has been incurred by the contractor.

Facilities for home cooking

Instead of making arrangements for daily deliveries, some local authorities now make a periodic delivery of frozen meals. To support this activity they supply recipients at cost with mini freezers, microwaves & steamers.

Paragraph 1 of Part II of Schedule 9 to the Health and Social Services and Social Security Adjudications Act 1983 states:

‘A district council shall have power to make arrangements as they may from time to time determine for providing meals and recreation for old people in their homes’

Although this is a power, rather than a duty, it ensures that district councils can have welfare functions delegated to them by larger local authorities. This ‘power to make arrangements’ extends to the provision of equipment necessary for storing and cooking meals provided as part of a welfare package, particularly if the equipment is supplied at no more than cost price.

Therefore equipment supplied to enhance a package of non-business welfare will itself be a non-business supply. Any equipment sold for a profit, or not forming part of a package of care, represents a sale of goods and is subject to normal VAT liabilities.