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Where Taxpayers and Advisers Meet

Will domestic reverse charge apply to labour supplied by umbrella company

mehranmichail
Posts:12
Joined:Sat Oct 22, 2016 2:33 pm
Will domestic reverse charge apply to labour supplied by umbrella company

Postby mehranmichail » Sun Jun 11, 2023 9:51 am

Hi
Can any one help to clarifiy confusion.

Will domestic reverse charge apply to labour employed by umbrella company if that labour is under employment contract with umbrella company and umbrella company does supervision, control and direction.?

Kind regards

Trevor S
Posts:110
Joined:Tue Jan 01, 2019 12:37 am

Re: Will domestic reverse charge apply to labour supplied by umbrella company

Postby Trevor S » Sun Jun 11, 2023 10:43 pm

You need to establish whether the umbrella company would be regarded as a labour-only subcontractor, or an employment business - using the definitions / tests here:

Code: Select all

https://www.gov.uk/guidance/vat-reverse-charge-technical-guide#labour-only-sub-contractors
If they are a labour-only subcontractor, the DRC will apply - subject to the normal other conditions, of course. However, if they're an employment business, they'll need to charge VAT on the supply of staff.

mehranmichail
Posts:12
Joined:Sat Oct 22, 2016 2:33 pm

Re: Will domestic reverse charge apply to labour supplied by umbrella company

Postby mehranmichail » Tue Jun 13, 2023 8:14 am

Thanks a lot for guidance. So, if the umbrella company does control, Supervision and direction of people working on the project, this will be supply of construction services?


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