Employment Agency’s Reimbursed Medical Staff Costs Not Exempt from VAT, Tribunal Rules

1st Alternative Medical Staffing Ltd – FTT Ruling on VAT Exemption for Nurse and Care Assistant Services

• The First-tier Tribunal (FTT) ruled against 1st Alternative Medical Staffing Ltd, stating that the employment business cannot claim VAT exemption on the supply of nurses and care assistants to the NHS and private care providers, as their services do not meet the criteria of being provided by a state-regulated institution under VAT regulations.
• The FTT determined that the taxpayer’s previous registration with the Care Quality Commission (CQC) had lapsed prior to the relevant period, and the agency’s services were deemed to be in direct competition with commercial providers, thus failing to qualify for VAT exemption under VATA 1994 and the VAT Directive.
• Despite acknowledging that agency staff are essential for maintaining medical care standards, the FTT concluded that the taxpayer’s operations resemble those of commercial entities, which disqualified them from claiming input tax deductions, leading to the dismissal of their appeal.

Source KPMG

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• AMS supplied medical staff to healthcare providers and treated reimbursed employment costs as VAT exempt.
• HMRC determined both employment costs and commission were taxable, issuing VAT assessments.
• AMS was not state-regulated and did not meet the requirements for VAT exemption under Note 8 of Group 7, Schedule 9 VATA.
• The FTT found the supply of staff was not ‘closely related’ to the supply of medical care and dismissed the appeal.
• The appeal was unsuccessful; all consideration received by AMS was subject to VAT.

Source: rossmartin.co.uk

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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