This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Supplies of staff

Nonimous
Posts:80
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?

les35
Posts:596
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.'


Return to “VAT & Excise Duties”