VAT on supply of care staff

Supply of staff by agencies is normally a standard-rated supply for VAT purposes. However, it will be an exempt supply if it is the supply of services consisting of the provision of medical care by a person registered or enrolled in any of various specified professions, including those on:

•the register of medical practitioners;
•the register kept under the Health Professions Order 2001; and
•the register of qualified nurses, midwives and nursing associates maintained under the Nursing and Midwifery Order 2001.

There are often VAT cases before the tribunals where the issue at dispute is whether this medical care exemption applies. In a recent one, a company provided carers to nursing and residential care homes. The Tribunal agreed with HMRC that none of the carers were registered or enrolled in any of the specified professions, nor were they carers directly supervised by such individuals (which would also have made the supply exempt). Had the Tribunal found for the company on that point, it would have had to go on to consider if the carers were actually providing the ‘medical care’ required for the exemption.

In summary, the company did not make exempt supplies relating to the provision of medical care by a suitably qualified person. It therefore had a lot of VAT to pay over to HMRC, where it had not charged VAT on what were in fact taxable supplies.

VAT law is often complex. Mistakes can prove very costly. If your business is involved in the supply of staff, make sure you understand the VAT treatment of these supplies. Please speak to us if you need further help in this area.