VAT – Liability of costs and VAT reliefs: Many aids and adaptations will have VAT charged on them at the standard rate (currently 20%). However, several VAT reliefs are available depending on the goods or services being procured.

VAT reliefs – Zero rating (0%): Some items of equipment that have been designed solely for use by chronically sick or disabled people and that are made available to these persons for their personal or domestic use can be purchased VAT free (zero-rated).

A ‘chronically sick or disabled’ person (hereafter a disabled person) is defined by HM Revenue and Customs as someone with a:

• physical or mental impairment which has a long-term and substantial adverse effect on their ability to carry out everyday activities
• condition which the medical profession treats as a chronic sickness, such as diabetes, arthritis, etc

It does not include an elderly person who is not disabled or a chronically sick or any person who is temporarily disabled or incapacitated, such as with a broken limb.

Equipment or appliances that are either designed for general use or are designed for use by disabled and non-disabled people alike will not qualify for VAT relief.

It is the supplier’s responsibility to apply the correct VAT rate and, where zero-rating applies, to ensure that the required conditions are met.

For some items, zero-rating depends on whether the particular item is designed solely for use by a disabled person. In these cases, the supplier may need to get written confirmation of the designer’s intention or the design specification of the product from the manufacturer.

Items of equipment qualifying for zero-rating:  The following items of equipment when supplied to a charity (such as Housing 21) to make available to disabled persons for their personal or domestic use can usually be zero-rated:

• Wheelchairs
• Electrically or mechanically adjustable beds designed for disabled persons
• Chairlifts/stair-lifts designed for use in connection with wheelchairs
• A hoist or lifter designed for use by disabled persons – this includes riser-recliner chairs, sometimes also called lift and tilt chairs, but does not include recliner chairs which do not have the lift or tilt facility
• Commode stools, commode chairs or devices with a warm air drier and bidet jet incorporated, frames or other devices to help sitting on or rising from a sanitary appliance
• Emergency alarm systems - zero rating only applies to the alarms that are specifically made available to disabled residents. Where a new emergency alarm system is installed in a scheme that has a mix of disabled and non-disabled residents the zero rating must be apportioned to the disabled element on a percentage basis as is applicable to the particular scheme.
• Artificial limbs, artificial respirators, leg braces, neck collars and heart pacemakers
• Mobility scooters
• Any other equipment and appliances that have been designed solely for use by disabled people, for example,
  • vibrating pillows for the deaf or hard of hearing,
  • incontinence products,
  • transcutaneous electrical nerve stimulators, etc

The above list includes some of the items that may be more relevant to Housing 21 and is not comprehensive. More information can be found in HMRC’s VAT Notice 701/7. 2

Where applicable the services of installing the goods listed above qualify for zero-rating as well as the services of repair and maintenance of such goods.

VAT reliefs – Reduced rating (currently 5%) There are two types of services involving mobility aids that can be supplied at the reduced VAT rate.

• The services of installing mobility aids in residential dwellings for use by a person who, at the time of the supply, is aged 60 or over.
• The supply of mobility aids by a person installing them for use in residential dwellings by a person who, at the time of the supply, is aged 60 or over.

The reduced rate does not apply if the supplier is only supplying an eligible mobility aid. The supplier has to be both supplying and installing the eligible mobility aid for the reduced rate to apply. The reduced rate for the installation of mobility aids is solely age related and the resident does not need to be disabled in order to qualify.

Mobility aids that can usually be supplied and installed at the reduced rate of VAT:

• grab rails
• ramps
• stair lifts
• bath lifts
• built-in shower seats or showers containing built-in shower seats
• walk-in baths with sealable doors

Repairs of these goods once they have been installed are not eligible for relief and these mobility aids can only be reduced-rated if they are supplied by the installer.

The reduced rate does not apply to general adaptations carried out in the home of a person over 60, such as widening passageways or building extensions (although see section 5.2a) above for adaptations that are eligible for zero-rating). For the reduced VAT rate to apply the scheme manager will ask the resident to complete a written declaration to prove that they meet the age criteria.