Apparently, Your Choice Barnet, to whom Barnet council outsourced the services for severely disabled people, is charging disabled service users VAT if they receive direct payment. Janet Leifer of CADDSS was puzzled by this and followed it up.

Janet also asked who regulates the day care services and as you will see below Mr. D’Costa told her these are carried out by “our Integrated Quality in Care Homes Team.” This team is made up in part from staff from the London Borough of Barnet. Of course the London Borough of Barnet is not running the day care services. They are being run by a local authority trading company, Your Choice Barnet, which seems to receive most of its funds from the London Borough of Barnet.

Confused? So are we. And it gets even more confusing if you compare these answers to the one given by Your Choice Barnet’s spokeswoman as quoted by The Press here.

Janet says: ‘I am beginning to feel as though I have followed Alice down the rabbit hole into a Wonderland governed by a logic I am unfamiliar with, does the London Borough of Barnet “say what it means” or does it “mean what it says””?’

Hopefully we will find out more when the Safeguarding Overview and Scrutiny Committee discusses the Task and Finish Group’s report on Your Choice Barnet at its committee meeting on Wednesday, 27 November 2013 at 7.0 pm at Hendon Town Hall.

As far as we understand, as long as these services are provided by the council – no VAT is chargeable for them, and the budget disabled people get to pay for the day centre should cover their full needs; However, if they are provided by a for-profit company as Your Choice Ltd is, VAT may be charged, which in effect means that 20% less services can be purchased by the people who need the day centres.

Do we need another reason to demand that Your Choice Barnet services will be brought back in-house as a matter of urgency?

Below is the reply from Barnet Council, and Janet’s latest response, in an open letter to Mr. Rodney d’Costa, the London Borough of Barnet Commissioning Officer, who is responsible for the commissioning of services from Your Choice Barnet Ltd:

OPEN LETTER (sent 17/11/13)
Dear Rodney,

Thank you for your replies to my questions, which have raised further questions, which I would be very grateful if you could answer.

I seem to have two answers to the question “Should service users of Your Choice Barnet be charged VAT”

When I submitted a written question “Has Your Choice Barnet Ltd. raised the amount service users are charged for services from April 2013?” before the Contract Monitoring Overview and Scrutiny Committee Meeting on 9 October, I received the reply: “YCB service users on direct payments will have seen an increase as VAT has to be charged against the rates set by the Council.”

At the committee meeting I asked a supplementary question, asking why these service users were charged VAT, as disabled people were often exempt from paying VAT. You told me you were not an expert on VAT, but the Council had consulted experts and had to recoup these costs. Unfortunately this question and answer was not minuted.

In your email of 14 November you state “No customers have been charged VAT for services provided by Your Choice Barnet.” I was informed the two regulated services, Barnet Supported Living and Valley Way Respite Service, were exempt from VAT. As for the four Your Choice Barnet day care services, I was informed YCB was legally obliged to add VAT for customers in receipt of direct payments, but Your Choice Barnet had chosen not to levy this VAT on customers but had absorbed the cost. Will Your Choice Barnet continue to absorb this cost?

I would be grateful if you could explain if, or how, the London Borough of Barnet is involved in the charging process between Your Choice Barnet and its service users.

I asked who regulates the day care services and was told inspections were made via your Integrated Quality in Care Homes Team. Is this team an independent body, like CQC or Ofsted, with no link to the London Borough of Barnet? Are reports of its inspections made public, like CQC reports which can be seen by the public on the CQC website?

Best wishes, Janet

* * *

Here is the full correspondence:

From:D’Costa, Rodney
Sent: 14 November 2013 16:14

To: Janet Leifer
Subject: Re: Should service users of Your Choice Barnet be charged VAT?

Dear Janet,

Thank you for your email of 10 November 2013. Please see my response below to the points you raise.
1. No customers have been charged VAT for services provided by YCB on behalf of Barnet Council.
1.1 As you will know, the situation on VAT is governed by HMRC regulations. Thus “regulated services” such as Barnet Supported Living Service and Valley Way Respite Service – which are both regulated by the Care Quality Commission – are exempt from VAT.
1.2 For day care services (YCB’s Rosa Morrison, Flower Lane, Community Space and Barnet Independent Living Service), YCB is legally obliged to add VAT for customers in receipt of direct payments and who use these services. However, I can confirm that YCB has chosen not to levy this VAT on customers and have instead absorbed this cost, which amounts to circa £10,000 since February 2012.
2. The commissioning and procurement of care and support from providers is subject to various checks reflecting our focus on quality and safety for customers. This includes inspections via our Integrated Quality in Care Homes Team. YCB’s “non-regulated” day care services i.e. Rosa Morrison, Flower Lane, Community Space and Barnet Independent Living Service are therefore included in this process.

I hope this clarifies the matter and any concerns you may have.

Yours sincerely,
Rodney D’Costa

Rodney D’Costa
Head of Social Care Commissioning

From: Janet Leifer
To: D’Costa, Rodney
Sent: Sun Nov 10 17:20:33 2013
Subject: Should service users of Your Choice Barnet be charged VAT?

Mr. Rodney D’Costa

Head of Social Care Commissioning

Adults and Communities

London Borough of Barnet

10 November 2013

Dear Mr. D’Costa,

Should service users of Your Choice Barnet be charged VAT?

We met at the Contract Monitoring Overview and Scrutiny Committee Meeting on 9 October 2013, when you gave additional answers to questions I had submitted in writing.

Your answer to my question “Has Your Choice Barnet Ltd. raised the amount service users are charged for services from April 2013?” continues to disturb me.

You replied: “YCB service users on direct payments will have seen an increase as VAT has to be charged against the rates set by the Council.” I am worried that these service users have had their costs increased by 20% because they are charged VAT. This must be a very difficult situation for them.

You told me you were not an expert on VAT, but the Council has consulted experts. I am not an expert but this is what I have found out from official sources.

As far as I can see VAT is not charged on social care services provided by state regulated care providers, which would include Barnet Supported Living and Valley Way Respite Service run by Your Choice Barnet Ltd. and regulated by CQC. I presume that no service user is charged VAT for either of these services. Can you confirm this?

The situation may be complicated by the possibility that day centre services provided by Your Choice Barnet are not covered by the VAT exemption because daycare services are not state regulated. The situation is explained on the Think Local Act Personal Consortium website.

However if there is VAT on daycare services for direct payment users, the Council should be covering it - see para.114 of the official DH guidance:

• “In estimating the reasonable cost of securing the support required, councilsshould include associated costs that are necessarily incurred in securing provision, without which the service could not be provided or could not lawfully be provided. The particular costs involved will vary depending on the way in which the service is secured, but such costs might include recruitment costs, National Insurance, statutory holiday pay, sick pay, maternity pay, employers’ liability insurance, public liability insuranceand VAT.”

Now I must ask why the London Borough of Barnet has not followed this official guidance? Why are these service users being charged VAT?

I was surprised to learn that day care services are not state regulated. Please could you tell me who inspects the day centres run by Your Choice Barnet Ltd – Rosa Morrison, Barnet Independent Living Service, Flower Lane and Community Space? These day centres, as you know, provide services to very vulnerable adults who would not be able to tell anyone if they were any safeguarding issues.

Everyone in Barnet – service users, their families, staff of Your Choice Barnet Ltd and yourself, all want to ensure that service users get the best service and that they can afford to pay for the services they receive. However this will not happen if the difficulties, financial or otherwise, that they are enduring are not addressed promptly.

Best wishes,

Janet Leifer

Barnet Resident and member of CADDSS

(Campaign Against the Destruction of Disabled Support Services)

CADDSS campaigns for good quality services for disabled Barnet residents.