Commentary

BB/2/04 VAT—hire of staff by employment businesses

Part V16 Forms and other HMRC material

BB/2/04 VAT—hire of staff by employment businesses

BB/2/04 VAT—hire of staff by employment businesses

Business Brief, Issue 2. 21 January 2004

This Business Brief updates Business Briefs 20/98 and 13/99, which set out Customs & Excise view on the VAT implications arising from changes proposed by the Department of Trade and Industry (DTI) to the rules governing the conduct of employment businesses and the rights of workers using them. It also covers the VAT position of wardens' and estate managers' services.

The DTI made the Conduct of Employment Agencies and Employment Business Regulations 2003 on 17 December 2003, which come into force later this year. At present many employment bureaux act as agents for VAT purposes or use the staff hire concession. This enables them to charge VAT on their commission; or on an amount which excludes the salary and associated costs. As a response to the proposed DTI regulations some bureaux may decide to change their business structure in a way that would make them principals for VAT purposes when they place staff. VAT would then have to be accounted for on the full charges made to their clients, including the salary and associated costs.

Customs has undertaken not to disturb VAT

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