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Understanding Welfare Restructuring: A Game Changer for Social Care Providers

In the Key Considerations for VAT Welfare Restructuring: Streamlining Implementation webinar hosted by Care England on 30 January 2024, experts Richard Ayres, a social care advisor, and Jock Waugh, the Managing Director of Kieran Lynch & Co., delved into the pivotal aspects of welfare restructuring for social care organisations.

This session highlighted how such restructuring can significantly benefit care providers, offering insights that could reshape the financial landscape of social care services.

The Essence of Welfare Restructuring

Welfare restructuring emerges as a beacon of financial optimisation for care providers. By adopting a structured approach, organisations can charge VAT on care fees while simultaneously recovering VAT on operational expenditures. This strategic move not only ensures ongoing VAT relief but also opens doors to a retrospective claim spanning four years, bolstering both valuation and financial support.

Navigating the Process

Embarking on the journey of welfare restructuring requires meticulous planning and adherence to specific steps. A cornerstone of this process involves the formation of a VAT group, incorporating a service company to oversee care fees and VAT management. Such alignment must meet HMRC's stringent criteria for group control and registration, underscoring the importance of transparency and negotiation with public funders to harmonise VAT payments and retrospection.

The Roadmap to Restructuring

Spanning 6 to 9 months, the restructuring process is divided into distinct phases: initial disclosure and VAT group application, novation alongside VAT billing, and concluding with retrospection and VAT recovery. This timeline underscores the necessity for continuous engagement with both funders and HMRC, ensuring compliance and efficiency in quarterly and annual VAT return cycles.

Beyond Restructuring: VAT Opportunities in Social Care

The webinar also shed light on additional avenues for VAT relief and optimisation within social care. From the King's Crest 2 action to strategic dual development projects, care providers are encouraged to explore these opportunities. Moreover, the significance of precise wording in planning documents and the implications of agency VAT rules were emphasised, offering a comprehensive view of VAT's impact on social care.


The insights shared by Richard Ayres and Jock Waugh provided a profound understanding of the financial mechanisms available to social care providers. Welfare restructuring stands out as a transformative strategy, enabling organisations to navigate the complexities of VAT, enhance their financial health, and ultimately, deliver superior care services.

For care providers seeking to explore the benefits of welfare restructuring and VAT management, Kieran Lynch & Co. offers expert guidance and support.

Learn how your organisation can benefit from these strategies by getting in touch.

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