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HMRC internal manual

VAT Welfare

HM Revenue & Customs
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Welfare services: services directly connected with the provision of care, treatment, or instruction - elderly, sick or distressed persons

Section 2 of VAT Notice 701/2: Welfare provides guidance on the provision of welfare services connected with the provision of care, treatment or instruction designed to promote the physical or mental welfare of elderly, sick, distressed or disabled persons.

To determine the liability of a service, you will need to consider

  • who is supplying the service (charity, state-regulated private welfare institution/agency or public body),
  • the status of the person being cared for, and
  • the nature of the service being supplied.

We interpret ‘distress’ as involving severe mental or emotional pain, anguish or financial straits. It denotes severe, rather than mild, emotional or physical discomfort.