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Where Taxpayers and Advisers Meet

Supplies of staff

Joined:Thu Jul 16, 2009 12:39 pm
Supplies of staff

Postby Nonimous » Thu Dec 31, 2020 12:44 pm

Good morning

My client is two companies who are not in a VAT group.
A Ltd makes entirely taxable supplies, B's supplies are almost entirely exempt
Client has suggested that B becomes the contractual employer of any new employees and then loans them to A. B will charge VAT on this as a supply of staff and therefore have some taxable supplies to improve its partial exemption percentage.
It seems rather artificial from an economic reality perspective but I can't see why one should not do this. Any thoughts?

Joined:Wed Aug 06, 2008 3:09 pm

Re: Supplies of staff

Postby les35 » Thu Dec 31, 2020 2:53 pm

I agree. it could be challenged on the basis of artificiality. Once company B is partially exempt, then HMRC can direct that, for example, the Standard PtEx Method cannot be used.
You could explore the option of a VAT Group registration, and ensure your Partial Exemption method is 'fair and reasonable.'

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