Are you looking for VAT relief on your supply of staff?

Key definitions

Supply of staff

A supply of staff occurs when you provide another person with the use of an individual, who is either contractually employed, or otherwise engaged by you, in return for a consideration.

The individual supplied would normally come under the day-to-day direction and control of the organisation you’ve supplied them to (the ‘host’). Day-to-day control equates to operational control.

Operational control

Operational control means having oversight over when, where and what work the individual performs. For example, a doctor may be self-sufficient when it comes to treating patients, but they would be operationally controlled if the host organisation instructs them on working hours, what facility they should work from and what patients they should be treating.

A supply of staff can look similar to labour intensive services. However, these may fall into one of the available VAT exemptions on the basis the contractor (/supplier) maintains direction and control of the individual workers. Such service contracts are not for supplies of staff and are not specifically addressed here.

What is the general VAT position?

In general, any supply of staff for a consideration is subject to UK standard rated VAT where the place of supply is the UK. However, some exemptions and concessions exist which can be used to relieve the VAT burden. These are especially important when staff are supplied to organisations which cannot reclaim all of their VAT costs.

Which sectors are commonly impacted?

Staff supplied to the health and care sectors, education, social housing, charities and nonprofits, financial firms and many public bodies are commonly affected.