Commentary

V6.235 Liability of supplies and activities of employment bureaux

Part V6 Business by business

V6.235 Liability of supplies and activities of employment bureaux

Employment Bureaux

V6.235 Liability of supplies and activities of employment bureaux

Introduction to employment bureaux

Employment bureaux include businesses which introduce workers to potential employers and businesses which supply the services of their own employees. See V6.235 and V6.236 for VAT issues pertinent to employment bureaux. This article focuses on the liability of supplies and activities of such businesses including the important topic of agency while V6.236 looks at VAT recovery and other practical points for the sector.

Liability of supplies of employment bureaux

Depending on whether an employment bureau acts as principal or agent (see 'Agent vs principal for employment bureaux' below) it will typically make:

  1.  

    •     supplies of staff

  2.  

    •     supplies of introductory services

Both of these activities will normally be standard-rated (although see 'Healthcare staff and employment bureaux' below for activities which may be exempt) and therefore most supplies of employment businesses will be taxable.

Supplies of staff and supplies of services

It is worth highlighting HMRC's interpretation of a supply of staff in Notice 700/34/12 which states that a business makes a supply of staff if, for a consideration, it provides another person with the use of an individual who is either:

  1.  

    •     contractually employed or otherwise engaged by the business

  2.  

    •     a director of the business

In HMRC's view, what is important is 'that the staff are not contractually employed by the recipient of the supply, but come under the direction of that person' (Notice 700/34/12, para 2.1). This is to be distinguished from a business which supplies services

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