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Staff Hire VAT Concession
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Scott Craig VAT Partner
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Changes to Staff Hire VAT Concession What are the changes How will they impact on you Possible solutions
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The change From 1 April 2009 ‘All businesses making supplies of staff as principal have to account for VAT on the full value of their supply’.
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Remember Supply of staff Made by principal (not agent)
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Who is not affected Genuine agents Secondments made for no profit Sheltered placement schemes Those who recover all VAT incurred
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Who is affected? Businesses supplying staff who use the concession You - if you benefit from concession You - if you cannot recover VAT
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VAT & Care Organisations Make exempt and non-business supplies Registered for VAT? VAT is an irrecoverable cost
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Impact of the change From 1 April VAT will be applicable to the full value of staff. Additional VAT = additional costs Reduced budgets Need for additional funding
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Are you sure? Yes – the final countdown… HMRC undertook a consultation after it decided to withdraw the concession! Long overdue?
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What should you do?
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Protest
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Ignore
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Reduce the cost of VAT
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No VAT when… No supply of staff No supply Joint contacts of employment Genuine agency arrangement
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No supply No supply of staff Supply of exempt services Financial, Medical, Nursing Education, Welfare
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Joint contracts of employment But consider legal issues
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Genuine agency arrangement Intermediary finds work/workers Individual and you enter into direct contract Intermediary does not pay worker Intermediary services not staff
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Schemes/partnerships HMRC do not approve of tax planning arrangements
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Action Don’t ignore the changes Consider your position & budgets Look to reduce the cost of irrecoverable VAT
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Need help? scott.craig@scott-moncrieff.com 0131 473 3500 or 0141 567 4500 Specialist VAT consultants in Edinburgh and Glasgow
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