The government has been accused of “sending out mixed messages” on independent living, after it emerged that it wants to charge VAT on the payroll services provided to disabled people who receive direct payments for their social care.
Cheshire Centre for Independent Living (CCIL) is having to take HM Revenue and Customs (HMRC) to the first-tier tribunal to fight off its attempt to force it to charge disabled service-users 20 per cent VAT on top of their monthly fee for using its popular payroll service.
The tribunal case is due to be heard in Manchester in early December.
Other disabled people’s organisations are also challenging the HMRC VAT demand on their own payroll services, but CCIL’s will be the first to be heard at tribunal.
CCIL insists that its payroll service – which is used by nearly 3,000 disabled people across the north-west of England who use direct payments to employ personal assistants – should not be subject to VAT under HMRC’s “welfare” exemption.
It has been trying to persuade HMRC to withdraw its claim for more than four years, but the government refused even to take the dispute to a mediation service.
Tom Hendrie, CCIL’s head of policy and communications, said the imposition of VAT on payroll services was “absolutely not right”, but he said HMRC had refused to see it as qualifying for an exemption and had “really dug their heels in about it”