Medical Staff - Agency Supplies through Umbrella companies

Another issue that has cropped up frequently in VAT history is the extent of the VAT Exemption that applies for the provision of medically qualified staff through agency arrangements. The current case relates to Mainpay Ltd which ended up in the Court of Appeal with its arguments that exemption did apply for its provision of medical consultants through a limited company A&E Ltd and on to the NHS Trust. Mainpay Ltd took the form of an umbrella company placing temporary staff with agencies or end users. HMRC took the view as is often the case in these arrangements that the charges by Mainpay Ltd were taxable and could not be seen as the provision of medical care. The distinction was made however been the supply of the staff and the supply of the services of those staff.

The Court of Appeal did not reject the argument that an exemption can apply to services further up the line in the supply chain, but it sees that at each stage the supply must be one of medical care.

HMRC has a deal of interest from all tax perspectives in the activities of umbrella companies it should be noted in general. Clarity on the VAT arrangements is just one aspect to be aware of.

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