​

​

​

Introduction

​

​

​

The supply of staff occurs when a company provides its employees or directors to another organisation for consideration and the receiving company directs and exercises day to day control over the employee or director while working in their organisation.  The key point is that the recipient company does not employ the staff provided but is responsible for their day to day direction in carrying out whatever work is required. 

 

The VAT liability for the supply of staff is as follows: 

​

• Supply of staff from a UK business to a UK business  = Standard Rated 20%

• Supply of staff from a UK business to a non UK business = Outside the scope of VAT. (Zero Rated)

• Supply of staff from a non UK Business to a business located in the UK( incl Isle of Man) = Reverse Charge VAT applicable at 20%

​

​

Consideration for a supply = Value of what you are given in return for providing the required services and VAT must be accounted for on the full amount. 

​

Consideration will include the following (received from the recipient company and or paid to the staff member by the recipient company) and VAT should be applied to the sum total of these:

​

• Fees for staff provision

• Salary

• National Insurance 

• Bonuses

• Pension contributions

​

​

Paymaster Services

​

Paymaster services occurs where there a number of associated companies that employ their own staff but one company has the role of paying the salaries and expenses to all the employees of each company. 

​

The recovery of the salaries and expenses by the paymaster company from the other companies is not a supply of staff and is outside the scope of VAT.  

​

Where the paymaster charges the other associated companies a fee for acting as paymaster, then this fee is subject to VAT.

​

​

Supply of Directors

​

The Supply of Directors occurs in the following circumstances and 20% VAT is applicable on any fees charged:

​

• Company A supplies a Director or Employee to serve as a Director at Company B for a Fee

• Company A provides a Director or Employee to serve at a number of associated Companies B, C, D and E. 

• Accountancy Firm A supplies one of its Directors to serve as an accountant at Company B

• Company A invests and takes a majority stake in company B and appoints one of its Directors to the board to provide day to day specialism in running the  target company for a fee 

​

​

Staff Employment Agencies

​

Employment agencies can act as either principal or agent when they are involved is the provision of staff.

​

• A company that employs workers under its own contract of services and pays their salary then provides them to another company as a supply of staff = 20% VAT applicable on total charge collected from recipient company. Staff umbrella companies operate in this way.

• A company that acts a an agent to another company by only finding and introducing staff to that company then this is not a supply of staff but rather an introductory service = 20% VAT applicable on agency fee

​

​

​

​

​

​

-Contains public sector information licensed under the Open Government Licence v3.0.

​

​

​​