Two employment businesses that provide temporary nursing staff to hospitals have been dealt a huge financial blow by failing to keep up with the changing shape of HMRC concessions. 1st Alternative Medical Staffing and Delta have lost High Court judicial review proceedings brought against HMRC regarding the VAT position of their services.
Under the terms of HMRC’s Staff Hire Concession, withdrawn in 2009, employment businesses were permitted to charge VAT on their commission only, with the pass-through salary not subject to VAT. Under the alternative Nursing Agency Concession, which is still in force today, a business providing nursing staff can, subject to conditions, choose to treat their whole supply as VAT exempt. Both these concessions have been a valuable relief for hospitals and care home customers who cannot usually reclaim any of VAT charged to them by employment businesses.
Source RSM
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