This hearing of the Upper Tribunal was of two related cases appealed by HMRC from the First-tire Tribunal (‘FTT’) relating to the exemption for the provision of welfare services. In essence, VAT Act 1994 has the effect that the supply of services by such a body is only exempt for VAT purposes if the body is ‘state-regulated’. In England and Wales, there is no regulation of the provision of day care services as such. But in Scotland there is devolved legislation which means that the provision of day care services is regulated; and the same is true in Northern Ireland under separate devolved legislation. That means that day care services provided by commercial providers in England and Wales are not exempt and are liable to VAT at the standard rate, whereas such services in Scotland and Northern Ireland are exempt. 
 
Background 

The first