If you are an intermediary (employment agency or umbrella company) supplying clients who can\u2019t get their VAT back, how about not charging it in the first place?\u00a0 These clients might be public sector bodies (central and local government and the NHS), any other healthcare providers, charities, schools, banks and insurance companies.<\/p>\n
Until 2009 HMRC operated what was known as the Staff Hire Concession<\/em>, whereby under certain conditions intermediaries only had to charge VAT on their mark-up.\u00a0 This was withdrawn as it was thought to be contrary to European law (or so they said).<\/p>\n The method for agencies<\/em><\/p>\n That was until ReedEmployment took them to the tribunal.\u00a0Reed have form here \u2013 they won one of the major VAT cases in the 1990\u2019s, which was how the Staff Hire Concession came about.\u00a0 This time HMRC were after \u00a3143 million, and they lost again: when one sees the amounts of money involved it is slightly surprising Reed\u2019s defence was that there were in fact two supplies: one by Reed of introductory services and the other by the temps themselves of whatever work they did.\u00a0 VAT would only be payable on the \u2018introductory services\u2019 (i.e. Reed\u2019s mark-up), because the temps themselves would be below the VAT threshold.<\/p>\n
\nthat they have decided not to appeal.\u00a0 They say (somewhat disingenuously in our view) that the judgment only applies to the facts of the case and has no wider implications \u2013 see http:\/\/www.hmrc.gov.uk\/briefs\/vat\/brief3211.htm<\/a>.<\/p>\n