Payroll services provided by a charity to disabled people

The taxpayer was a charity providing support services for disabled people their families and carers. These included a payroll service that aimed to empower disabled people to direct their own care; to simplify and increase uptake of direct payments; and to alleviate any additional stress for the individual.

The dispute concerned the VAT liability of fees earned by the company for the provision of a payroll services to disabled people who employed a personal assistant to help them with their needs. On the funding for a personal assistant the legislation exempts the supply of ‘services which are directly connected with the provision of care treatment or instruction’ for disabled people if provided by a charity or regulated body (VATA 1994 Sch 9 group 7).

The taxpayer claimed that the payroll service was exempt. This was on the basis it was a ‘necessary part of making the care package...