HMRC have issued a brief to clarify the policy on the VAT treatment of supplies of health professionals, nursing auxiliaries, care assistants and support workers by employment businesses.

The brief sets out the basic situations where the employment businesses must charge VAT to their clients in a case where staff are supplied to the client. It notes in particular the distinction between situations where the client retains direction and control of the staff and where the employment business maintains the direction and control of the staff.

The brief also confirms that when an employment business supplies registered health professionals as a principal to a third party, where the health professional is working under the control and guidance of the third party, it is making a taxable supply of staff to that third party – not an exempt supply of healthcare or welfare services. It is the third party which is responsible for providing healthcare to the final patient, rather than the business supplying the staff which has no such responsibility. A taxable supply of staff is made even where the employment business is responsible for ensuring that the workers it provides are properly trained and qualified when they work under the control of the third party.

The brief goes on to explain the VAT implications of supplies of locum GPs, and nurses, nursing auxiliaries and care assistants by state regulated agencies. With regard to the latter the brief confirms a concession operated by HMRC whereby in certain circumstances nursing agencies (or employment businesses that provide nurses and midwives, as well as other health professionals) may exempt the supply of nursing staff and nursing auxiliaries supplied as a principal to a third party.

Finally the brief explains the VAT implications of supplies of contracted-out welfare services, and comments on the wording of terms and conditions of agreements used by employment businesses in relation to their staff.

The full text of the brief can be accessed at http://www.hmrc.gov.uk/briefs/vat/brief1210.htm