Should there always be VAT on temporary staff?

4th June 2015

The First-tier Tribunal has been hearing Adecco’s “temporary staff” appeal in which the taxpayer has argued that VAT should only be charged on any commission it receives for its introductory services not on the full amount, including wages paid to such staff.  A decision is expected in late summer/autumn 2015.

The appeal challenges HMRC’s decision that output VAT was due from Adecco on the full amount collected from its clients in relation to temporary workers, including the wages paid to temporary staff.

Adecco’s view is that output VAT is chargeable only on the commission charged by Adecco for its introductory and ancillary services, including payroll services and not on the wage related payments.  

The outcome of the case is likely to have implications for all those who supply or engage temporary staff, and particularly those who use temporary staff and are unable to recover VAT in full.  

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