Staff hire and VAT

HMRC have published Brief 8/09. It provides guidance in relation to the withdrawal of the VAT staff hire concession from 1 April.

Following its withdrawal all businesses making supplies of staff will have to account for VAT on the full value of their supply.

The principal reason for the withdrawal of the concession was that following a review which commenced in 2006 it was concluded that the concession is unsupported in EU and UK law i.e. it is illegal. For that reason alone it had to be withdrawn.

The withdrawal was announced on 12 March 2008 giving those affected just over 12 months’ notice that the concession was to be withdrawn from 1 April 2009.

The brief contains more explanation as well as ten questions and answers on likely problems.

As independent VAT consultant Neil Warren says the ‘long-awaited withdrawal of the...