HMRC announcement on VAT group structures

Today (24 April 2025), HMRC declared certain VAT group structures in the care sector as tax avoidance arrangements. This affects providers who have formed VAT groups with non-regulated entities to recover VAT on costs. HMRC will refuse new applications for these structures and is reviewing approximately 200 existing arrangements. 

While no retroactive penalties are planned, organisations using these structures should review their options, which include voluntary unwinding of the arrangement or waiting for HMRC contact. 

We continue to advocate for zero-rating welfare services rather than exemption. 

Please contact [email protected] with questions.