Agency Staff – VAT recovery
01-01-2007
You will be aware that last year HM Revenue & Customs
(HMRC) clarified their policy regarding the recovery
of VAT incurred on agency medical staff - this is now
restricted to nurses only.
HMRC have recently provided us with further clarification
regarding other agency staff and so the current policy
in respect of all agency staff is as follows:
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VAT recovery is allowed on the provision of agency nursing staff. This includes healthcare assistants where they are working alongside healthcare professionals and are providing nursing services. These services fall within code 41.
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VAT recovery is not allowed in respect of any other healthcare professionals.
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VAT recovery is allowed on the provision of typing, secretarial, telephonist and clerical services, including agency staff. These services fall within code 69.
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VAT on the provision of all other agency staff, e.g. catering, laundry, portering staff, is not allowed under any code.
If a third party provides a catering, laundry or portering
service the VAT would be recoverable under the relevant
code, but individual staff would not.
In addition, where agency staff work exclusively on taxable
business activities
(e.g. in a staff/visitor restaurant) then the VAT would
be recoverable under the business activities rules.
VAT Liaison has helped to contribute to the latest Treasury
review of the refund direction list via the Department
of Health and the results of this review are expected
by the end of January 2007. We understand that VAT recovery
in relation to all professional services is urgently
being reviewed.
We will provide a further update on this once the results
of the review have been announced.
This is clearly a complex area so if you have any queries
on this matter please contact your usual VAT Liaison
advisor.