VAT issues on the supply of staff
VAT issues on the supply of staff

The following Tax guidance note provides comprehensive and up to date legal information covering:

  • VAT issues on the supply of staff
  • What is a supply of staff for VAT purposes?
  • When do supplies of staff typically arise?
  • Employment bureaux
  • Secondments
  • Supplies of staff and introductory services—time, value and place of supply
  • Exceptions
  • Other specific situations
  • Practical considerations—contractual terms

This Practice Note considers the VAT treatment of a supply of staff in the course or furtherance of a business. It is important to correctly identify where a supply of staff has been made, as opposed to a supply of an introduction to staff or a supply of services that involves the use of staff, as the VAT treatment of the supplies will be different in each case. The distinction is especially crucial to an employment bureaux whose business may be carrying out supplies of staff or the supplies of introductions to staff (or possibly both in different areas of the business).

What is a supply of staff for VAT purposes?

HMRC states that a business makes a supply of staff for VAT purposes if, for a consideration, it provides another person with the use of an individual who is either:

  1. contractually employed or engaged by the first business, or

  2. a director of the company

It is irrelevant for VAT purposes whether the employment or engagement of the individual who is supplied is documented in a formal contract, letter of appointment or on a less formal basis. The key issue is that the staff provided are not contractually employed by the recipient of the supply (only by the supplier), yet come under the recipient's direction and control.

It is important to distinguish