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The Low Incomes Tax Reform Group (LITRG) has published a comprehensive report which examines VAT reliefs available to disabled people. The report also highlights the need for better administration of the reliefs to make them easier to obtain.

The report was prepared by the international VAT network of PricewaterhouseCoopers LLP and sponsored by the Nuffield Foundation.  It maps how VAT reliefs work across selected European countries against the European Union’s goal of achieving a ‘society that is open and accessible to all’, and against the objectives of UK government policy to remove barriers restricting opportunity and choice for disabled people.

Robin Williamson, LITRG Technical Director, says: “Disabled people face substantial additional costs in their daily lives. LITRG applauds the government for zero-rating products ‘solely designed’ for disabled people.  However, there are other products that are not solely designed for disabled people but which are nevertheless critical to overcoming disability.  Not all of these have a reduced VAT rate but we believe they should.”

A person with a muscular disease, for example, would get VAT relief on the purchase of a wheelchair, but not on an orthopaedic bed, which is equally necessary, because the latter was not "designed solely" for use by disabled people.  Similarly, someone with a visual impairment would be able to buy a talking mobile phone VAT-free, but not a big-button phone for home use.  The LITRG believes that these anomalies should be removed to avoid VAT becoming an additional burden on disabled people.

The report also looks at how difficult it is for disabled people to get information about VAT reliefs and then obtain those reliefs.  There are a number of obstacles at present and the report calls for these to be removed or redesigned so that the whole process is made far easier.

The following recommendations are made in the report:

• UK VAT law should be amended to better reflect EU law by introducing a reduced VAT rate on goods used exclusively by disabled people, whether or not they were designed solely for this purpose;
• The UK should introduce equality of VAT treatment by making VAT reliefs available equally to people with mental disabilities;
• VAT reliefs available for modifications to private residences of disabled people should apply equally to workplace modifications;
• HMRC guidance on the available reliefs should be made simpler and more widely available;
• Steps could be taken to make existing UK VAT reliefs more accessible, by reducing or removing the administrative and practical inconvenience of claiming them.

Links 

Low Incomes Tax Reform Group

Nuffield Foundation