VAT Input Tax Denied on Payroll Companies’ Invoices

• The First-tier Tribunal dismissed ITS Plant-Tech Ltd’s appeal against HMRC’s VAT assessments denying input tax on invoices from payroll companies.
• The Tribunal held the companies did not supply taxable labour/staff to ITS Plant-Tech; the employees remained ITS Plant-Tech’s employees in substance.
• The invoices were treated as payroll administration services only, with wages and employers’ NIC being ITS Plant-Tech’s own employment costs rather than consideration for a VATable supply.
• As a result, VAT charged on those wage and NIC elements was not recoverable as input tax under section 24 VATA.
• HMRC’s earlier assessment of output tax on similar invoices issued to the payroll company was not determinative of the appeal.

Source: bailii.org

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.

---

---