The First Tier Tribunal case of Reed Employment Ltd casts doubt on the removal of the VAT staff hire concession from 1 April 2009. Prior to removal of the concession VAT was only chargeable on the commission charged by agents rather than the full hire charge.
Businesses which use temporary workers may have been charged too much VAT and may be able to make reclaims. This is particularly important where the hirer is unable to claim their VAT in full.
Agencies and businesses which hire temporary staff should look at this position as a matter of urgency.
To discuss the impact of the decision, please contact Vaughn Chown or your usual contact at Gabelle.