On 16th October, Portland hosted a workshop to 50 professional advisers and their customers at the Solent Hotel highlighting the market and regulatory dynamics affecting the Care Homes sector. Expert speaker Graham Lovell from Rockhaven Healthcare Sector explained that there will clearly be demand from an ageing population for Care Homes yet only those that properly understood their environment and can manage a tight operation will benefit. Those that fail to do so, including those that are highly geared and cannot carry their lenders with them, will fall by the wayside.
Interestingly, it seems that this industry has now become the latest embroiled in the hot topic of “tax avoidance” because of the actions of the more successful operators.
An investigation in the Independent has found some companies are cutting their taxable UK profits by arranging their structures such that UK operations take on high-interest loans from their holding companies based off-shore in the Channel Islands. These interest payments reduce the profits that are chargeable to UK tax whilst the associated income taken offshore is taxed in a low tax rate regime.
Portland Director James Tickell commented:
“The Independent investigation shows that several care companies are known to have benefited from this device. The article, as I am sure many readers will, takes the populist stance that they are lowering the amount of tax payable unfairly, especially given the profits arise in part from NHS business. Others will reply that these business are working legally within the system in order to make their business viable and survive in, what has now become, an extremely competitive industry.”