Other local authority activities: housing and community projects: care and repair schemes
The Care and Repair scheme provides help to elderly and disabled homeowners to improve their property so that they can continue to live there. The Department of Communities and Local Government (DCLG) and the local authority may both provide financial assistance in the form of grants for the work to be carried out. Grants from either of these sources are outside the scope of VAT.
The scheme is administered by a limited company but is carried out by care and repair agencies. These may be charities or housing associations, but are usually local authorities. The repair agency will arrange for the work to be carried out and pay on behalf of the homeowner.
For this service they will charge a fee amounting to a percentage of the cost of the building works completed within a specific period. Bodies in the private sector also carry out these services and so they represent a taxable business activity when carried out by a local authority.
Although the local authority, acting as the repair agency, makes arrangements and payments on behalf of the homeowner, the contracts are between the homeowner and the contractor. As it is not a party to the contract and is not receiving the supplies, the authority is not entitled to recover the VAT charged by the contractor.