VAT. Reduced rate for disabled people

VAT

Reduced rate for disabled people

Fentons Solicitors LLP is one of the country's leading claimant personal injury solicitor firms, recovering tens of millions of pounds worth of compensation for accident victims every year.

Fentons has a specialist team dedicated to pursuing compensation claims on behalf of victims who suffer spinal injuries in all types of accident, be it a road collision, an accident in the workplace or whilst on holiday or travelling in a foreign country.

The firm continues to attract increasing numbers of serious injury instructions nationally and these are often high-profile cases involving brain, spinal and /or other catastrophic injuries. Fentons serious injury team includes leading national experts, with many years experience of handling cases of the maximum value and complexity.

For a number of years, Fentons has been a keen supporter of the work of the Spinal Injuries Association, which offers invaluable support and advice to those living with spinal cord injury throughout the UK, regardless of how their injury occurred. Fentons is proud to be the sponsor of the SIA’s Advice Line, its’ very important flagship service.

WHAT IS SIA?

SIA is the national organisation for people with spinal cord injuries and their families. If you, a relative or friend is paraplegic or tetraplegic, or you are interested in our work, why not join us? Membership is free of charge and all new UK members will receive a year’s free subscription to SIA’s bi-monthly magazineForward.An annual subscription to Forwardis £20.00.

We also circulate a bi-monthly email newsletter, ‘e-clips’ to all who subscribe while our popular interactive website offers Chat Rooms and a Message Board as well as hundreds of pages of useful information.

We produce a wide range of publications (available to purchase) which deal with all aspects of living with spinal cord injury, e.g. books on bowel and bladder management, sexuality, publications for health care professionals, as well as sports opportunities. We also have an extensive series of Factsheets on a wide range of topics, and, for those pursuing a compensation claim; we publish a Directory of Personal Injury Solicitors. Our Advice Line is accessible by e-mail, fax, post and telephone and provides accurate and up-to-date information on subjects including welfare advice, specialist equipment, legal rights etc as well as health related topics. We run an employment service, Workwise, for those wishing to return to employment or take up retraining or volunteering. Our Health and Ageing projects both work to improve the quality of life of spinal cord injured people and can be accessed via the Advice Line. Externally, our Peer Support Service, staffed by spinal cord injured people, operates at the Spinal Injuries Centres in England, Wales and Northern Ireland.

SIA also actively campaigns on vital issues affecting the everyday lives of disabled people, set out in our manifesto ‘Campaigning for Change’. We are represented on major voluntary and statutory bodies and our own Governing Board is composed of spinal cord injured people. We have our own state-of-the-art premises, SIA House, which combines the twin principles of inclusive design and accessibility and from here we run the only specialist spinal cord injury Library in the country.

To find out more, or join us, please write to us at:

Spinal Injuries Association, SIA House, 2 Trueman Place, Oldbrook, Milton Keynes MK6 2HH or contact us on:

Tel: 0845 678 6633 (General Office – 9-5)

0800 980 0501 (Freephone Advice Line (9.30-1pm & 2pm– 4.30pm) Fax 0845 070 69211

Website: www.spinal.co.uk E-mail: [email protected]

VAT Reduced Rate for Disabled People

Introduction

If you're disabled you don't have to pay Value Added Tax (VAT) on certain goods and services that you buy or bring into the UK. Some building work may also be free of VAT.

In general, equipment or appliances that have been designed solely for use by disabled people are eligible for zero-rating.

This guide explains what's included in the scheme, who qualifies, and what you have to do so your supplier doesn't have to charge you VAT.

How the VAT relief works

If the goods or services you buy qualify for the VAT relief, your supplier will give you a sales invoice showing VAT at 0 per cent. This means that you won’t be charged VAT. (It’s not a case of you having to pay the VAT and then claiming it back from HM Revenue & Customs (HMRC).

Which equipment and services can be bought without paying VAT?

If you're disabled, you won't have to pay VAT when you buy any of the following items:

 adjustable beds, chair lifts, hoists and sanitary devices

 certain types of auditory training aids (but not standard hearing aids)

 certain types of low vision aids (but not spectacles and contact lenses)

 medical and surgical appliances designed solely for the relief of a severe abnormality or a severe injury

 alarms

 motor vehicles, wheelchairs, boats and other equipment and appliances designed solely for use by chronically sick or disabled people

You also won't have to pay VAT on the installation, repair and maintenance of these items, or on any spare parts and accessories needed for them.

Certain building work to a disabled person’s private residence may also be VAT free. This includes:

 ramps, widening doorways and passages

 installing, extending or adapting a bathroom, shower room, washroom and lavatories

 lifts

If you need to have any general-purpose goods adapted for your use because of your disability, anything you pay to have them adapted will be VAT free. You will still have to pay the normal rate of VAT on the goods themselves.

Who can buy these goods and services without paying VAT?

You'll only be able to buy goods and services without VAT if you are disabled and you are buying them for your own personal or domestic use.

What counts as disabled?

For VAT purposes, the majority of SCI people will be covered by the following Her Majesty’s Revenue and Customs (HMRC) definition:

 you have a physical or mental impairment which has a long-term and substantial adverse effect upon your ability to carry out everyday activities You won’t qualify if you are temporarily disabled or incapacitated, such as suffering from a broken leg or other temporary injury.

You don't have to physically buy the goods in person. If someone else buys the goods and services for you, then you still won't be charged VAT.

What counts as personal or domestic use?

Personal or domestic use means that the goods or services are supplied for your own private use, rather than for business purposes.

Also, the goods or services must be just for your own use - not for use by anyone else, or chronically sick or disabled people in general.

However, if you and your partner are both chronically sick or disabled and you buy goods or services for both of you to use, then you won't have to pay VAT.

How to prove that you qualify when you buy goods and services without paying VAT

When you buy qualifying goods and services, you must give the seller a written declaration that you are entitled to buy them without VAT. This declaration has to give enough information to show that you qualify.

If you can't sign the written declaration yourself, the signature of “your parent, guardian, doctor or another responsible person” is acceptable on the declaration. Faxed declarations and declarations made via the internet are also acceptable, and those who are unable to sign for themselves might find this alternative preferable. Normally, the supplier will provide you with the declaration to fill in and sign. However, it is advisable to take a form with you when you purchase goods as the supplier may not have one available.

For an Eligibility Declaration form please see Appendix 1 on page 14 of this fact sheet.

What goods and services for disabled people can be zero rated?

Any equipment or appliances that have been designed solely for use by disabled people are eligible for zero-rating.

Anything that is merely destined for use by a disabled person, or is mainly purchased by disabled persons is not sufficient for zero-rating.

For example, general purpose equipment such as most computer hardware, ordinary or orthopaedic beds and orthopaedic or reclining chairs may benefit a disabled

person, but they are designed for use by disabled and able bodied people alike. Such products are not eligible for relief.

Equipment which has been designed solely for use by a disabled person will remain eligible for relief even though it can be purchased by people who do not have a disability. However, VAT relief will only apply to supplies which are made to eligible persons.

It is only the designer or manufacturer who can determine whether the goods qualify for zero-rating.

The designer, manufacturer or importer of the goods must retain evidence demonstrating that the goods in question fulfill the conditions for relief. There is no single piece of evidence that must be held but it may include:

 the disability needs to be addressed;

 the product specification for meeting those needs;

 results of tests demonstrating that the product meets the design intention; or

 patent or patent application.

If you think that the equipment or appliances you are buying have been designed solely for use by a disabled person but are unsure, you should ask the manufacturer or importer. Their literature will sometimes contain a statement that the equipment has been designed solely for use by disabled people.

Continence products

Eligible incontinence products, for retail sale, are zero-rated on the shelf. This means that there is no requirement for you to provide a written declaration to the retailer confirming that you are eligible for VAT relief.

Supplies of eligible incontinence products over the Internet or by mail order also qualify for VAT relief providing they are made to individuals and not institutions. Retailers and internet or mail order suppliers will require a signed declaration or other supporting evidence that the supply is to an incontinent individual. This is only if you buy more than:

 200 disposable pads;

 50 washable pads;

 5 collecting devices; or

 10 pairs of waterproof or leak-proof underwear.

Computer software and hardware

Computer systems are made up of a number of separate pieces of software and hardware. Some are general use items taxable at the standard rate of VAT, whilst

others have been designed solely for use by a disabled person and are therefore eligible to be supplied at the zero rate.

Parts and accessories

Parts and accessories are eligible for zero rate VAT provided that they were designed solely for use in or with goods which themselves qualify for VAT relief. Parts are integral components without which the equipment is incomplete.

Accessories are optional extras which can be used to improve the operation of the equipment, or enable it to be used, or to be used to better affect in particular circumstances. VAT relief does not apply to general use items such as standard batteries, even if these were purchased to be used within an item which is eligible for VAT relief. If the batteries were solely designed to operate within the eligible item however, they would be eligible for relief.

Services of installation, repair, maintenance and adaptation of goods

The installation, maintenance and repair of goods are eligible for zero rate VAT if the goods themselves:

 are eligible for relief; and

 are not paid for or arranged by the National Health Service, any other hospital or nursing home.

Examples of services of installation which can be zero-rated include:

 plumbing in a sanitary appliance;

 wiring up an electrically adjustable bed; and

 installing a chair lift.

The adaptation of any general purpose goods to meet your needs as a disabled person is also eligible for relief. This applies only to the service of adaptation - the goods themselves will not qualify.

Motor vehicles for disabled people

If you're disabled, you may not have to pay VAT on having a vehicle adapted to suit your needs as a disabled person.

If you're a wheelchair user, you may not have to pay VAT if you buy a specially adapted vehicle, whether new or second hand, for your personal or domestic use.

Purchasing an adapted vehicle

This guidance tells you what you need to know about purchasing adapted vehicles free of VAT if you are:

• a disabled wheelchair user planning to buy an adapted vehicle, or • looking to purchase a vehicle on behalf of a wheelchair user.

When dealing with motor dealers or HM Revenue & Customs (HMRC), you may hear the phrases ‘VAT-free’, ‘VAT relief’ or ‘zero-rate VAT’. In this context, these phrases refer to you not paying VAT when you purchase an adapted vehicle as part of this scheme.

You can purchase, lease or hire an adapted motor vehicle VAT-free when all the following conditions are met:

• the motor vehicle is supplied to a disabled person who normally uses a wheelchair to be mobile

• the vehicle is permanently and substantially adapted

• the adapted motor vehicle must be for the domestic or personal use of the disabled wheelchair user, and

• the supplier is given a completed declaration, form VAT1615A , which confirms eligibility.

Each of these conditions is explained in more detail below and, for the purposes of this relief, the following definitions apply.

What is the definition of a wheelchair and wheelchair user?

In legal terms, a wheelchair is a chair on wheels for disabled people, which is either manually propelled or electrically powered. A mobility scooter is not a wheelchair for VAT purposes.

A wheelchair user is any disabled person who normally uses a wheelchair in order to be mobile.

A person who occasionally uses a wheelchair such as: • when visiting a shopping or garden centre, or

• temporarily because of a broken leg

does not normally use a wheelchair and is therefore not eligible for relief.

A mobility scooter would usually have a central steering column and generally only be used outside the home.

What is an eligible adapted motor vehicle?

A motor vehicle seating no more than 12 people may qualify for the relief if it is designed or permanently and substantially adapted:

• for the carriage of a disabled wheelchair user, or

• specifically to allow a wheelchair to be carried on or in the vehicle.

A static or towing caravan with no means of independent propulsion is not a ‘motor vehicle’ for the purpose of this relief.

‘Motor vehicle’ includes: • cars

• multi passenger vehicles (MPVs) • light vans, and

• motorhomes.

What is meant by permanent and substantial adaptation?

removed quickly or easily. Generally the adaptation would require welding or bolting to the vehicle.

A substantial adaptation would alter the vehicle in a meaningful way, enabling a wheelchair user to use the vehicle which he or she could not use before it was adapted.

The adaptation must be both necessary and specific to suit the customer’s particular needs.

It must allow the disabled wheelchair user to either enter and drive, or enter and travel in the vehicle, or it must allow a wheelchair to be carried on or in the vehicle.

Examples of eligible adaptations

Qualifying adaptations may typically include any combination of the following: • a swivel seat (where not offered as standard equipment, for example, in motorhomes)

• a hoist to lift a wheelchair into or onto the vehicle

• a specialist wheelchair box, fitted to the top or back of the vehicle

• adaptations that enable a wheelchair user to drive the vehicle, such as push/pull brake and accelerator, hand controls or other aids that operate the primary driving controls.

This is not an exhaustive list.

The following do not qualify as adaptations:

• the fitting of a standard roof rack or standard roof box

• the attachment of a trailer to the back of a vehicle• the fitting of automatic transmission, or

• the fitting of parking/reversing sensors

because they are for general use and not specifically designed for disabled people.

This is not an exhaustive list.

The fact that the vehicle has been adapted does not, in itself, mean that it qualifies for VAT relief.

My car only needs minor adaptations- is it eligible for VAT relief?

No. The car itself will not be eligible for VAT relief. If you are having goods (including motor vehicles) adapted to suit your particular condition, the supply of this service, together with the goods used in the adaptation process, may be zero-rated.

Please notethis is a wider VAT relief available to all disabled people (and not just disabled wheelchair users).

What is meant by domestic or personal use?

Domestic or personal use is normal everyday use by the disable wheelchair user such as going to the shops, taking the children to school, travelling to and from work. It also includes incidental use at work, providing the main use remains as a private vehicle.

Domestic or personal use does not include business use – for example: • using the vehicle as a taxi

• buying and selling motor vehicles for profit.

How many vehicles can I buy VAT free?

The relevant VAT legislation does not impose any specific limit on the number of vehicles that you can buy VAT-free. However, frequent purchases may contravene the ‘domestic or personal use’ condition.

If you frequently purchase zero-rated motor vehicles, this may be considered

indicative of a business activity for VAT purposes. As well as the vehicles not being eligible for VAT relief, you may be liable to VAT registration (subject to prevailing VAT turnover limits) and have to account for VAT on the sale of these vehicles. You may also need to consider whether a personal tax liability is generated in respect of any profits from these sales and/or whether such activity may be in breach of any benefits that you may be receiving.

If at the time of purchase you intend to dispose of the vehicle(s) in order to profit from the VAT relief, zero-rating is not appropriate as this is not personal or domestic use of the vehicle.

Can anyone other than a disabled wheelchair user purchase an adapted motor vehicle VAT free

Yes. HMRC accepts that in some circumstances a disabled wheelchair user may be unable to purchase and/or drive a motor vehicle themselves – although the sale of the vehicle to a person connected to them (for example, parent, other relative or carer) would directly benefit the disabled wheelchair user’s mobility. Provided that the purchase is primarily for the domestic or personal use of the disabled person rather than the personal use of the connected person, zero-rating can be allowed. HMRC expects suppliers to verify that the vehicle is being purchased for the

domestic or personal use of the disabled wheelchair user. If you are purchasing the motor vehicle on behalf of a disabled wheelchair user, you may be required to provide additional information and evidence to your supplier to demonstrate this, such as:

• who is paying for the adapted vehicle? • who will own the adapted vehicle?

• who is the registered keeper of the adapted vehicle?

• does the family member/carer have another vehicle for their use? • where will the adapted vehicle be kept?

• who will use the adapted vehicle?

• what will the adapted vehicle be used for?• how often will the disabled wheelchair user use the adapted vehicle?

Does the vehicle have to be registered in the disabled person’s name?

No. As above, it is acknowledged that the disabled wheelchair user may not legally be allowed to have a vehicle registered in their name.

Yes. A second-hand adapted vehicle can be zero-rated if all of the previously mentioned conditions are met.

However, you should be aware that many motor dealerships operate what is known as the Second-Hand Margin Scheme when selling used vehicles.

This means that the supplier is only required to account for VAT on his ‘margin’, that is, the difference between the price he or she paid for the vehicle and the price achieved at sale.

Consequently, you should not necessarily expect any VAT saving to be directly proportionate to the price you pay for the vehicle.

What about the cost of repair or maintenance of an adapted vehicle?

The cost of repair or maintenance of an adapted motor vehicle can also be zero-rated when:

• the work relates to a vehicle (or the adaptation to a vehicle) that was zero-rated when originally supplied, and

• you provide a valid eligibility declaration to your supplier.

If you take the vehicle for repair or maintenance to a third-party garage you will need to produce the original purchase invoice for the vehicle or adaptation to confirm that it had previously been supplied at the zero-rate. Your supplier should also retain a copy as evidence for zero-rating his supply to you.

What is the Motability Scheme?

Motability is a charity helping disabled people and their families to become more mobile. It provides vehicles and powered wheelchairs to disabled people.

The scheme is not administered by HMRC although there is special VAT relief for vehicles leased under this scheme.

You can get more information about the Motability Scheme by contacting Motability Customer Information Service on01279 635 666or internet site

www.motability.co.uk

Your declaration for VAT1615A

At the end of this guidance is form VAT1615ADeclaration for zero-rated VAT supply of adapted vehicles and services. You need to state your name and address and describe your condition (the reason you are a wheelchair user).

Do I need to send a copy of my eligibility declaration to HMRC?

No, please pass the form to the supplier. The supplier will keep it safe as they may be asked to show it to a VAT officer at a future date.Please note, this scheme works on the basis that you are not charged VAT.

Therefore, you do not have to apply for a VAT refund from HMRC.

Need more information?

If you would like more help: • Go towww.hmrc.gov.uk

Their helpline is open Monday to Friday from 8am to 5pm.

• Contact us by secure e-mail on: http://www.hmrc.gov.uk/charities/vat-relief-disabled.htm

• Write to us at HM Revenue & Customs VAT Disabled Reliefs Team St John’s House Merton Road LIVERPOOL L75 1BB

Hiring and leasing vehicles

The hiring or leasing of an adapted motor vehicle is also eligible for VAT relief when the vehicle has been specifically adapted to meet the needs of a wheelchair user. This does not apply to vehicles with a capacity to carry over 12 people.

Attached at the end of this Information Sheet is an Eligibility declaration by a disabled person form and a Importation of goods for disabled persons: eligibility declaration by a disabled person form.

To obtain a Declaration for zero-rated VAT supply of adapted vehicles and services form VAT1615A (guidance for customers) or form VAT1616A (guidance for

suppliers), please contact the SIA Advice Line on Freephone: 0800 980 0501

Imported goods for disabled people

You can import certain goods into the UK without paying VAT or duty, as long as they're for your own domestic or personal use.

Goods you can import without paying VAT

Goods designed solely for the use of disabled people that you import for your own use are zero-rated anyway, but in addition, you may not have to pay VAT if you import any goods specially designed to give educational, employment or social help to people with disabilities.

You also won't have to pay VAT if you import spare parts, components, tools and accessories specifically or recognisably intended for such goods.

If the goods need adapting to make them suitable for use by disabled people, you can't get any relief on importing the unadapted goods. You'll have to get them adapted before you bring them into the European Union (EU).

How to get the relief

If you're bringing the goods in in your baggage, you don't need any prior approval. Simply declare them in the Red Channel or Red Point when you arrive. You may be asked to fill in and sign a declaration.

If you're bringing them in by any other means, you have to obtain authorisation first. Write to the National Imports Reliefs Unit (NIRU) and they'll send you a form to fill in. National Import Reliefs Unit

HM Revenue & Customs Custom House

Co Fermanagh BT74 4EJ

Tel: 028 6632 2298 Fax: 028 6632 4018

The form should be sent to HMRC, who in turn will send you a NIRU certificate and a copy of the certificate. Hand the certificate to customs when you import the goods, and keep the copy for your own records.

Goods imported by post

If the goods are being sent to you by post, ask the sender to write clearly on the package and its accompanying customs declaration:

'GOODS FOR DISABLED PEOPLE: RELIEF CLAIMED'

HMRC may send you a form to fill in and complete, together with a declaration. If the package isn't properly marked you may have to pay duty and VAT. If that happens, write to customs at the postal depot where the charges were raised, enclosing your original NIRU certificate, the VAT declaration and the document showing the

charges. Explain what happened and if HMRC are satisfied that you don't need to pay duty and VAT on the goods, they will repay them to you.

Goods imported as freight

If the goods are imported as freight you must claim relief by completing an import declaration on a Single Administrative Document (SAD, form C88). You can get an import agent to do this, but if you want to complete the SAD yourself and need more information on the details required for the import declaration, please refer to the Tariff.

Enter one of the following Customs Procedure Codes (CPCs) in Box 37 of the SAD: CPC 40 00 14 - for goods imported from outside the Customs Union on which you claim relief from duty and VAT

CPC 49 00 14 - for goods imported from the Special Territories or countries having a Customs Union with the European Community (EC) on which you claim relief from VAT

Present your copy of the NIRU certificate and if you're applying for a VAT zero rating, an eligibility declaration.

If you're still waiting for your NIRU certificate, you'll have to provide financial security for the duty and VAT before HMRC will release the goods. As soon as you receive the original NIRU certificate, send it to HMRC at the port or airport where the import declaration was made. Quote the declaration number and date. HMRC will discharge the security if they are satisfied you qualify for relief.

This factsheet has been prepared by SIA and contains general advice only which we hope will be of use to you. Nothing in this factsheet should be construed as the giving of specific advice and it should not be relied on as a basis for any decision or action. SIA does not accept any liability arising from its use. We aim to ensure the information is as up to date and accurate as possible, but please be warned that certain areas are subject to change from time to time. Please note that the inclusion of named agencies, companies, products, services or publications in this factsheet does not constitute a recommendation or

endorsement by SIA.

Updated Nov 2013 RC

Appendix 1: Eligibility declaration by a disabled person

Please note there are penalties for making false declarations Customer

If you are in any doubt as to whether you are eligible to receive goods or services zero-rated for VAT you should consult Notice 701/7 VAT reliefs for disabled people or contact our National Advice Service on 0845 010 9000 before signing the

declaration.

I (full name) ... of (address) ... ...

declare that:

 I am chronically sick or have a disabling condition by reason of: (give full and specific description of your condition); and that

 I am receiving from: (name and address of supplier)

* the following goods which are being supplied to me for domestic or my personal use:

(description of goods)

* the following services to adapt goods to suit my condition: (description of services and goods)

* the following services of installation, repair or maintenance of goods: (description of services and goods)

* the following alterations to my private residence: (description of alteration)

* the services of monitoring a personal alarm call system and I claim relief from value added tax.

... (Signature) ... (Date) Supplier I (full name) ... of (address) ... ...

am supplying to the person named above: * the following goods: (description of goods)

* the following services of installation, repair or maintenance of goods: (description of services and goods)

* the following alterations to a private residence: (description of alteration) * the services of monitoring a personal alarm call system

for the personal use of the disabled person.

... (Signature) ... (Date)

*Delete where necessary

Note

You should keep this declaration for production to your VAT officer. The production of this declaration does not automatically justify the zero-rating of the supply. You must ensure that the goods and services you are supplying qualify for zero-rating.

Appendix 2: Importation of goods for disabled persons: eligibility declaration by a disabled person

Please note that there are penalties for making false declarations Customer

If you are in any doubt as to whether you are eligible to receive goods or services zero-rated for VAT you should consult VAT Notice 701/7 VAT reliefs for disabled people or contact the National Advice Service on 0845 010 9000 before signing the declaration.

I (full name) ... of (address) ... ...

declare that

I am chronically sick or have a disabling condition by reason of: (give full and specific description of your condition)

and that I am importing the following goods from outside the European Community for domestic or my personal use:

(description of goods)

I claim relief from value added tax

... (Signature) ... (Date)