VAT on temporary staff – Reed Employment decision
The First Tier Tax Tribunal recently released its judgement in the VAT case of Reed Employment Ltd v HMRC.
The judgment could significantly change the current VAT treatment of supplies made by employment bureaux The Tribunal decision suggests that an employment bureau should only charge VAT on the commission fee portion of its charge to its clients, rather than the entirety of its charge. Accordingly, employment bureaux may have overcharged VAT to their customers where:
- They have accounted for VAT on the entirety of their charges since the withdrawal of the Staff Hire Concession (SHC) and Agency concession from 1 April 2009; or
- They have always charged VAT in full.
This was only a First Tier Tribunal decision and it was widely expected that HMRC would appeal this decision, however they have not.
Therefore, businesses using temporary staff and those agencies supplying staff to businesses which cannot recover VAT in full such as the finance, education and charities sector should seek guidance as to whether a claim can be made.
Contact us
For further information on making a claim, please contact Alison Horner on 01604 624 011 (email alison.horner@mhllp.co.uk) or Gerry Myton on 020 7429 4100 (email gerry.myton@mhllp.co.uk)
