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Home assistance for 178,000 people at risk as back-pay demands drive social care charities into insolvency

Following changes by HMRC to eradicate existing flat rates for overnight carers, charities are facing the prospect of insolvency as six years of back-pay totals a £400m bill for the Learning Disability sector. 

In 2015, as a result of two tribunal cases, the fixed rate for all-night care more than doubled from £25 up to £60 as guidance was updated in accordance with minimum wage standards.  Ever since, charities have been resisting HMRC’s demands for the back-payment of tens of millions of pounds to involved staff, repeatedly stating that this unexpected cost will have a hugely detrimental effect.

Despite agreeing their staff should be paid a higher amount for their work, charities are simply unable to make these payments without becoming insolvent or being forced to lay off chunks of their workforce.  As a result, many across the UK face being deprived of vital care.

While care charities struggle to meet their large bill and try to come to terms with potential closures resulting in large numbers of disabled people without the care they desperately need, it is a timely reminder of how just one thing can push a business over the edge into insolvency.

Hoping to find a solution, the charities involved have been active by seeking meetings with ministers but claim that their needs are not being prioritised thanks to fears over Brexit. The goal is a government halt on the enforcement of back-pay notices until March 2018 when there is an appeal court hearing.  In the meantime, councils across the country are being encouraged to pay more for future contracts with social care charities.

For more information on this or any insolvency issue, please contact Oliver Spence on 0115 9 100 206.

Posted on August 18, 2017

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