Hospitals & Care homes

In light of the 2017 custom & revenue Brief 2 regarding zero rating of construction costs in relation to mental health hospitals (where they have the attributes of a care home as defined in the brief). Does this have a knock on effect of making fuel and power for the same buildings qualify for lower rate VAT - because they would now be viewed as domestic supplies under 701/19 (fuel & power)?
  • Essentially the Brief is accepting that some buildings called hospitals are in fact care homes for VAT purposes, where their intended purpose is to provide accommodation for people in need of care "because of old age, disability, past or present dependence on alcohol or drugs [or] past or present mental disorder".

    Paragraph 3.2.1 of notice 701/19 gives examples of where the fuel and power reduced rate would apply. This includes "homes providing care for - (a) the elderly or disabled, (b) people with a past or present dependence on alcohol or drugs, (c) people with a past or present mental disorder" - virtually identical wording to that used in the Brief.

    So it seems reasonable to apply the reduced rate on fuel and power to any building where the construction / first grant would now be zero rated under the Brief. I think that the specific exclusion of "hospitals" from the reduced rate given in the notice should only apply to those buildings which are not zero rated by the Brief.