The following Tax guidance note provides comprehensive and up to date legal information covering:
There are no specific laws, including tax laws, applicable to outsourcing arrangements and no technical legal meaning of the term. Consequently, each outsourcing arrangement will be specific to its own particular facts and will raise a different mix of tax issues, including VAT issues. This Practice Note summarises the main VAT issues to consider in relation to outsourcing arrangements. For the wider tax issues that will be relevant, see Practice Note: Outsourcing—general tax issues.
This Practice Note focuses on contractual outsourcing arrangements. For details on joint venture outsourcing arrangements, see: Joint ventures and tax—overview.
As part of outsourcing arrangements, it may be necessary for the customer to transfer business assets to the service provider in order for the service provider to be able to provide the outsourced services. Business assets transferred as part of an outsourcing may include, for example, office space and IT equipment. Employees may also be transferred as part of the outsourcing arrangements (for further details, see: Supply of staff, below). The transfer of business assets (depending on the specific nature of the assets) and staff would generally be subject to VAT.
If the transfer of business assets constitutes a transfer of a going concern (TOGC), the transfer of the assets will be treated as neither a supply of
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