The Fair Playing Field report by Monitor - published in March 2013 - recommended that the Government report on the case for extending VAT refunds to some charitable NHS-funded healthcare providers by Budget 2014, such as hospices.
This issue will not now be considered until a wider review of the headings in the central Government VAT refunds scheme has been completed, which is expected to report back by this year’s Autumn Statement.
Responding to today’s Budget, which includes measures to reimburse air ambulance charities for VAT on fuel, Craig Duncan, Finance Director at national hospice care charity Help the Hospices, said:
"We are encouraged by the Government’s commitment in today’s Budget to cover VAT costs for air ambulance charities.
"We have long been working with the Government to address similar issues for hospices which provide the majority of hospice care in the UK, but unlike NHS providers, are unable to reclaim VAT on non-business supplies. This creates a considerable financial burden for hospices and diverts much-needed funds from patient care. Many hospices are already struggling to raise funds in a tough economic climate and demand for their services is rising, driven by the UK’s rapidly ageing population.
"We hope the Government will take action soon to close the VAT gap faced by hospices to ensure their funds are used fully for the benefit of patients and to address discrepancies across the healthcare sector on this issue."
Notes to Editor
- Section 41 of the 1994 VAT Act allows NHS providers to recover VAT on certain non-business supplies, including catering supplies, laundry and cleaning supplies, staff training, vehicle costs, waste disposal, maintenance and repairs. However, this rebate does not extend to charitable hospices.
- The issue of irrecoverable Value Added Tax (VAT) – which currently stands at 20% - places a significant financial burden on local independent hospices. The "VAT gap" faced by our member hospices across the UK amounts to an estimated £4 million a year.
- Hospices are unique among charitable providers of healthcare because they contribute so significantly to the health economy. Last year, hospices in the UK spent over £513 million on caring for patients, their carers and families.
- Hospices in England receive on average 34% of their funding from the Government, with the remainder coming from charitable funds.
- The Fair Playing Field report by Monitor - published in March 2013 - recommended that the Government report on the case for extending VAT refunds to some charitable NHS-funded healthcare providers by Budget 2014. The Secretary of State for Health has committed to reviewing this.
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