Consultation tracker

HMRC has invited interested parties to contribute to a review of the VAT staff hire concession. The consultation follows the commencement of a review of these VAT arrangements, which will inform decisions on the future of the current arrangements and will consider issues such as:

• Existing use of the staff hire concession and the effect of any withdrawal;
• The VAT treatment of employment bureaux, dependent on their status; and
• The impact of the DTI 2003 Conduct of Employment Agencies and Employment Business Regulations, under which some bureaux may have changed their business structure in a way that makes them principals when they place staff.

The current operation of the staff hire concession is set out in Part A of the Statement of Practice contained in HMRC Notice 700/34 ‘Staff’. Business Brief 10/04 also sets out the VAT treatment that can be applied in relation to all employment businesses and employment agencies (referred to here as ‘employment bureaux’) until the conclusion of the HMRC review. Currently, many employment bureaux act either as agents for VAT purposes or, are able, as principals, to use the staff hire concession. In either case, bureaux are only required to charge VAT on their commission, or on an amount excluding salary and other associated costs.

Members wishing to respond to the consultation are urged to contact CTRG with their comments as soon as possible.