The Value Added Tax (Health and Welfare) Order 2002

Explanatory Note

(This note is not part of the Order)

This Order, which comes into force on 21st March 2002, amends Group 7 of Schedule 9 to the Value Added Tax Act 1994 (c. 23). Group 7 makes provision for the exemption of the supply of health and welfare services.

The effect of this Order is to specify the types of organisations that are entitled to exemption for the purposes of item 9 of Group 7 (welfare services) as well as the types of services the supply of which can be exempted under that item. In addition, the Order amends item 4 to enable provision to be made in a new Note (7) for a consistent interpretation of what is now termed a “state-regulated” institution in both item 4 and item 9.

Article 3 simplifies item 4 by inserting a reference to a state-regulated institution. “State-regulated” is defined in article 6. This ensures that the legislative references in item 4 and item 9 are consistent and comprehensive.

Article 4 substitutes a new item 9 (welfare services) which removes the requirement that supplies be made otherwise than for profit. Further, it provides that exempt supplies of welfare services can be made by state-regulated private welfare institutions, as well as by charities and public bodies.

Article 5 substitutes a new Note (6) (definition of welfare services) which inserts a reference to care within the exemption for services directly connected with children and young persons. Further, it provides that, in the case of services supplied by a state-regulated private welfare institution, the only services that are included within the exemption are services in respect of which the institution is regulated.

Article 6 inserts a new Note (7) to provide a common definition of “state-regulated” for the purposes of the institutions referred to in items 4 and 9.