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bigduckontax
bigduckontax, Accountant
Category: Tax
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This is a VAT question. We provide temporary staff to Nurseries.

Customer Question

This is a VAT question. We provide temporary staff to Nurseries. All our staff are DBS checked/qualified etc. However the business provides the staff to Nurseries for a fee. Recently we have registered for VAT and charge VAT on our staff which are provided on an hourly rate on an adhoc basis. The staff are employed by us under zero hours contracts. Therefore a nursery has a requirement for an additional member of staff. Ring us. We provide that member of staff, charge an hourly rate (+VAT) for the staff member and pay them appropriately.
We know that nurseries are VAT exempt as Ofsted registered childcare providers.
We however are not. As we simply provide a staffing service. Which once we passed the VAT limit caused a small issue (Suddenly having to charge VAT) - but all our clients were please for us in growth, and continue to use us.
Recently however one client has claimed that the service we provide should be VAT exempt, and requesting a refund. We struggle to find a basis for this as we are not childcare providers but a temp/perm staffing agency.
What we are struggling for is a definitive statement on this. We believe we are right (although in some ways it would be nice to be wrong!) in charging VAT.
Any definitive advice would be great.
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer and pleased to be able to help you with your question. You are correct and your one client is not. This matter is covered in VAT Notice 701/57. This is a very long and complex Notice, but the relevant extract is: 'However, if the employment business maintains the direction and control of its health professional staff to make a supply of medical care directly to a final consumer, then the employment business is providing medical services rather than merely a supply of staff. In these circumstances, the business is making an exempt supply of health services' From the tenor of your question you provide, but are not responsible for the direction of the staff supplied therefore the supply is standard rated not exempt. I do hope that I have been able to clear this small point up for you.
Customer: replied 1 year ago.
Thank you for your response. I would like to clarify the point one step further if I may. The staff we supply are "Childcare" only. (Nursery Nurse is not healthcare role as I am sure you know). We therefore supply temporary staff into nurseries/pre-schools which is classed more as education. I assume the point you make still applies? This is a fairly niche area and not really addressed in much documentation. Thanks again for your help so far.
Expert:  bigduckontax replied 1 year ago.
Your supply is still standard rated. I can see your client's problem, they have to pay the tax yet cannot recover is as an input. However the same will apply to their utility bills and it is merely a cost of sales in their accounts.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3385
Experience: FCCA FCMA CGMA ACIS
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Customer: replied 1 year ago.
Yes - it is an slightly odd situation for all our clients. Many Thanks
Expert:  bigduckontax replied 1 year ago.
Yes, they really are caught by Benjamin Franklin's dictum that in life there are but two certainties, death and taxes! Please be so kind as to rate me before you leave the Just Answer site.
Expert:  bigduckontax replied 1 year ago.
Please ignore the second bit of my last comment; thank you for your support.
Customer: replied 1 year ago.
Thanks!
Expert:  bigduckontax replied 1 year ago.
Delighted to have been of assistance.

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