Staff Hire VAT Concession

Scott Craig

VAT Partner

Changes to Staff Hire VAT Concession

What are the changes How will they impact on you Possible solutions

The change

From 1 April 2009

‘All businesses making supplies of staff as principal have to account for VAT on the full value of their supply’.

Remember

Supply of staffMade by principal (not agent)

Who is not affected

Genuine agentsSecondments made for no profitSheltered placement schemesThose who recover all VAT incurred

Who is affected?

Businesses supplying staff who use the concession

You - if you benefit from concessionYou - if you cannot recover VAT

VAT & Care Organisations

Make exempt and non-business suppliesRegistered for VAT?VAT is an irrecoverable cost

Impact of the change

From 1 April VAT will be applicable to the full value of staff.

Additional VAT = additional costsReduced budgets Need for additional funding

Are you sure?

Yes – the final countdown…HMRC undertook a consultation after it

decided to withdraw the concession!Long overdue?

What should you do?

Protest

Ignore

Reduce the cost of VAT

No VAT when…

No supply of staffNo supplyJoint contacts of employmentGenuine agency arrangement

No supply No supply of staff

Supply of exempt servicesFinancial, Medical, NursingEducation, Welfare

Joint contracts of employment

But consider legal issues

Genuine agency arrangement

Intermediary finds work/workersIndividual and you enter into direct

contractIntermediary does not pay worker

Intermediary services not staff

Schemes/partnerships

HMRC do not approve of tax planning arrangements

Action

Don’t ignore the changesConsider your position & budgetsLook to reduce the cost of

irrecoverable VAT

Need help?

scott.craig@scott-moncrieff.com0131 473 3500 or 0141 567 4500Specialist VAT consultants in

Edinburgh and Glasgow