If you are a health professional -a Nurse- who is staffed by a recruitment agency then you must be aware of the nursing agency VAT Concession.
HMRC has confirmed that the nursing agency VAT exemption does not apply to Umbrella Companies. This is because there is another party between the employment business and the end user. Meaning that an umbrella company does not directly supply workers unlike recruitment agencies and hence they are excluded from concession.
HMRC believes the concession should be applied to the direct supply of the nurses and the nursing staff by employment business or nursing agency to the end clients.
What is the Nursing Agency VAT concession?
In simple words, nursing agency VAT concession is a tax law that means recruitment agencies and employment business does not have to charge VAT when supplying certain types of healthcare workers.
The concession applies when:
- The worker being supplied is a registered nurse
- The worker being supplied is a unregistered auxiliary but directly supervised by a registered nurse
- The worker being supplied is an unregistered auxiliary, whose services are supplied to a NHS, private hospital, hospice or a care home, and form part of the care given to the patient.
The aim is to reduce the cost of medical staff.
The concession does not apply when:
- The supply of general care assistants are involved in providing personal care such as washing, catering or dressing patients
- They are working in care home without the supervision of a healthcare professional
HMRC says, for agencies to benefit from the concession, the worker being supplied must undertake some direct form of medical care such as taking blood pressure or administering drugs for the patient. To qualify for the concession, employment business must be registered with:
- Scottish Commission for the Regulation of Care
- Care Standards Inspectorate for Wales
- Northern Ireland Health and Personal Social Services Regulation and Improvement Authority
- Care Quality Commission for supplies before 1st October 2010.
Since 2017 and the introduction of IR35 in the public sector there has been a drastic increase in the Umbrella companies by NHS workers. The VAT concession might be confusing for recruiters (who pay VAT), the end client, agency and the umbrella company. If you are a healthcare professional, your agency is required to pay VAT for your services.
Working through Umbrella Company in the healthcare sector
If you are working through an umbrella company, the administrative work is handled by them. This includes forwarding timesheets to your agency by adding VAT (if not exempted). They will pay VAT on your behalf to HMRC after receiving funds from the agency. They will also take care of your tax and National Insurance. The Umbrella Company will guide you how much your take home pay will be after tax and NI payments.
If you are looking for an umbrella service, please feel free to contact us on 020 3500 2615