Supplies of staff

By Tolley

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Supplies of staff
  • What constitutes a supply of staff?
  • VAT treatment
  • Valuation
  • Agent or principal
  • Specific scenarios
  • Directors
  • Staff employment companies
  • Concessions relating to staff

This guidance note provides an overview of the VAT treatment of supplies of staff. Businesses that are involved in supplying staff in the healthcare sector should read the Welfare - supplies of staff guidance note for more information.

De Voil Indirect Tax Intelligence, 143 (28) (subscription sensitive); Notice 700/34 
What constitutes a supply of staff?

Businesses are treated as making a supply of staff when they provide one of the following to another organisation in exchange for any form of consideration:

  • an individual who is contractually employed or engaged by the business
  • a director of the business


The most important requirement is that the member of staff is not contractually employed by the recipient who receives the individual, but comes under the customer's control and direction. If the business provides services, such as catering and construction, to another party and the staff remain under the supplying business' control and direction, this is not a supply of staff but a supply of catering / construction, etc. This is important to remember if the services provided could be liable to VAT at the reduced or zero-rate, or be exempt. Also if the services are provided to a customer in another country, different VAT rules may apply.

If the business is involved in supply services to customers located in other countries, the following flowchart can assist with determining the correct VAT treatment of its services: Flowchart - Place of supply of services.

VAT treatment

If the staff are supplied to a UK customer or a private customer in another EU member state, the place of supply is the UK and UK VAT should be charged. However, if the staff are supplied to an EU business customer or

More on Other trade sectors: