TaxCorporate TaxHMRC to disregard VAT on temporary workers ruling

HMRC to disregard VAT on temporary workers ruling

Taxman says Reed Employment ruling had "no wider context"

THE TAXMAN will continue to apply VAT to the full amount invoiced by recruitment agents for the supply of temporary staff despite a first tier tribunal ruling that prevented it from doing so.

In March, a tribunal found that Reed Employment was entitled to charge VAT only to the commission element of its charges to clients, and not on the pay of its workers. HM Revenue & Customs did not appeal the decision.

However, a business briefing from HMRC has said that it considers the decision was decided on the “specific facts” of the case and “does not have any wider impact”.

At the time of the first ruling, Accountancy Age reported comments from Hannah Dobson, VAT director at Smith & Williamson, that HMRC’s decision to let the ruling stand without appeal was a “fantastic ploy” to interpret the ruling as it saw fit.

In response to HMRC’s business briefing, a statement from Smith & Williamson said: “In the weeks which followed the decision, it became clear that the essential facts on which the Tribunal based its decision were common to many employment businesses.

“Employment bureaux have been under great pressure from clients in the health care, housing association, charity and financial sectors, for whom VAT is a significant cost, to change their charging policies in line with the Reed decision, and we understand that some have already done so.

“If HMRC was hoping to restrict the effect of the decision, its response has come far too late.”

Related Articles

‘Google tax’ nets HMRC £281m

Corporate Tax ‘Google tax’ nets HMRC £281m

3m Emma Smith, Managing Editor
OTS report: Corporation tax should follow accounts

Corporate Tax OTS report: Corporation tax should follow accounts

5m Alia Shoaib, Reporter
HMRC tax evasion assistance requests double in five years

Corporate Tax HMRC tax evasion assistance requests double in five years

5m Emma Smith, Managing Editor
Spring Budget 2017: Making Tax Digital

Business Regulation Spring Budget 2017: Making Tax Digital

9m Shereen Ali, Deputy Editor
Tax fraud loses HMRC £16bn

Corporate Tax Tax fraud loses HMRC £16bn

10m Emma Smith, Managing Editor
HMRC nets £2.6bn in corporate tax from big businesses

Corporate Tax HMRC nets £2.6bn in corporate tax from big businesses

10m Accountancy Age editorial
Tax crackdown brings in £468m for HMRC

Corporate Tax Tax crackdown brings in £468m for HMRC

11m Accountancy Age editorial
Treasury Select Committee report released on Making Tax Digital

Accounting Standards Treasury Select Committee report released on Making Tax Digital

11m Stephanie Wix, Writer