Care Home – Residential & Nursing
Specialists in care homes
Care homes are being viewed as an increasingly attractive investment opportunity and are attracting new investors to the sector as well as increased activity by corporate groups. Whether you are looking to enter the sector for the first time or expand your existing business, it is imperative that you are supported by an experienced firm of accountants and business advisers.
Our specialist ‘care division’ comprises of accounting, taxation and corporate finance professionals, who are highly experienced in working with thriving nursing and care homes businesses whether they be owned by an individual home owner or a corporate group. Our current client base of care homes range from 18 to 82 bedrooms and are located nationwide.
Like many firms of qualified accountants of our size, we can of course provide all the business support services you need (see list of services – underneath). More importantly however we can also work with you to build your business, minimise tax liabilities, increase profitability and build the value of your investment.
Due to our extensive experience of the sector and network of business associates, we know what the industry norm is and what
businesses similar to yours are doing. In short, we know what works and what doesn’t. This in-depth knowledge enables us to provide you with the help and advice you need to develop your business.
Although we would of course prefer to take responsibility for all your annual compliance work (i.e. accounts and tax returns) if you prefer that your incumbent accountant maintains this role then we are more than happy to provide only our specialist services.
Detailed below are a few examples of common areas which can often be overlooked or underexploited. It is not simply being aware that these opportunities exist, you need to be assured that you are being ably assisted by a specialist in the field who has done this work many times before and is able to maximise the gains. If any of these issues are applicable to you or indeed if there is anything you would like to discuss please contact Tony Hornsby for a no obligation, free initial meeting.
It is normal practice for accountants to compare your current year results against your previous results and comment on whether you are doing better or worse. Because we are specialists in the care home sector we offer much more than this. We compare your results to those of your peers – similar sized care homes in a similar location.
We are able to provide this comparison because of our detailed knowledge of the sector and our huge amount of care home clients.
Introspective comparisons can often mask hugely significant issues. For example, perhaps your wages to fees ratio is similar to last year but what if your competitors wage costs were much lower (perhaps due to their lower staff numbers and/or shift patterns).
Armed with this type of feedback you could look to implement the required changes needed to increase efficiencies and hence profitability.
If you are unsure how to make these changes we can provide advice on implementing such changes.
Capital allowance claims
Where businesses have incurred capital expenditure on refurbishing their care home they have often under claimed tax allowances and therefore overpaid tax.
This can happen for example where the builders invoices inadequately detail what exactly has been acquired. We work alongside a specialist firm of quantity surveyors who can identify the assets which attract capital allowances and complete the relevant documentation for submission to the HMRC. Although relevant for all industry sectors, care homes attract more capital allowances than most – if you know where to look!
On the acquisition of a property where the seller has claimed capital allowances on fixtures the buyer & seller will need to either:
- Make an election under S198 or S199 CAA 2001 apportioning the sale price on a “just & reasonable” basis or, if no agreement can be reached between the two parties
- refer the matter to the Tax Chamber of the First-Tier Tribunal for an independent determination of the apportionment
It is vital that one of these two things is done to ensure the availability of capital allowances for the buyer.
Care homes can retrospectively apply for VAT registration from the commencement of trade up to March 2002 but why would you want to do so?
In summary, if you own a care home where you incurred capital expenditure pre March 2002 and a good percentage of your residents were funded by the local authority you may well be entitled to a VAT refund (one of our clients has recently received a VAT refund of over £0.5 million!) We operate on a no-win-no-fee basis, with the agreed fee only being due once a refund is received.
We can advise on the most tax efficient ownership/operation structures for your continuing and expanding trade. It is important also to constantly review the structure as circumstances change.
For example the introduction of the 50% personal tax rate has led to us currently implementing a number of structural changes for our clients. It never ceases to amaze how some care homes are structured resulting in significant amounts of unnecessary taxation for the owner. If you feel that you are paying excessive amounts of tax or are in any doubt as to your current structure please give us a call to discuss.
We have extensive experience of conducting due diligence on care homes. We provide an investigative financial analysis of a business, including results/projections, tax, cash flows, operational resources, management information, systems and controls, and management and employee issues.
This results in a commercially focused report which includes a summary of the key issues arising along with our views on the associated risk and implications for the deal. This helps you to address the key issues facing the business and, in particular, the drivers behind maintainable profits and cash flow.
Acquiring care homes
If you are acquiring care homes it is crucial to ensure the deal is put together correctly to maximise tax relief and minimise Stamp Duty Land Tax. We have successfully negotiated many transactions in the care sector, ranging from single unit operations to groups.
Our business associates also include funding providers who specialise in this sector with whom we have strong relationships and are very familiar with their lending criteria.
Tax planning strategies
If like many of our care home clients, your care home is proving to be recession proof, you may well have the enviable position of generating large profits. With help and expertise, there are ways in which you can minimise, mitigate or defer tax payments.
We are experienced in providing tax efficient strategies on income tax, capital gains tax and stamp duty land tax and what separates us from other similar sized firms is that we can provide access to solutions which would often only be available to large companies who have access to an array of accountants, lawyers and financial advisers. All of these more advanced strategies are exhaustively researched and pass through rigorous quality control procedures before they are released. Each strategy has received approval from several leading tax counsel and none of our strategies are released until satisfied that the strategy has a good chance of success.
If you own just one care home it is possible to compare your results against previous years but it is difficult to know how your results compare to your competitors or the industry average.
Moreover, armed with this information it is imperative to know what action to take. With our knowledge and database of care homes we are able to provide a report which identifies areas where improvements can be made and recommends what action needs to be taken to improve the future performance of the care home.
Regular forecasting is essential for profitability and solvency in any business. With the use of sophisticated software and a wealth of practical experience, we can produce forecasts for your care home to enable you to monitor and compare actual performance.
The forecasts also enable us to review the results of what if? scenarios such as lowering wage costs, increasing number of residents etc.
Management information systems
The provision of timely and accurate financial information is essential and is vital to assist you in making the right decisions for your business. Having in-depth experience of a whole range of accounting systems operated by care homes, we can advise on the available options and make appropriate recommendations.
Your business accounts are essential to the success of your business though we understand that your time is likely to be better spent building the business rather than maintaining your accounts. We can therefore provide you with as much or as little assistance as you require.
Considering a sale?
Our client base includes those who are seeking to acquire a broad range of care homes. They are well funded, can make quick decisions and understand that confidentiality is key.
If you are looking to sell your care home then please get in touch. We will be more than happy to discuss your requirements.
Require more information?
If you would like more information or would like to speak to us direct then call us on 020 8863 3337. Or if you would prefer, ask us a question online.