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HMRC internal manual

VAT Taxable Person Manual

Particular trades: employment bureaux including nursing agencies: the four possible supply situations

In the field of employment bureaux, the problem is to determine who is supplying the services of the worker to the client. There are four possibilities.

  • The bureau acts as a principal, supplying its own staff to the client. The staff may be employed by the bureau under a contract of service; or they may be self-employed, and engaged by the bureau under a contract for services. But in either case, they supply their services to the bureau, which then makes an onward supply as principal to the client.
  • The bureau acts as agent for the client.It finds workers for the client; these workers then enter directly into a contractual relationship with their new employer.
  • The bureau acts as agent for the worker. It finds employment openings for the worker; the worker then enters directly into a contractual relationship with his or her new employer.
  • The bureau acts as agent for both employer and worker.It acts as an intermediary in bringing both parties together, and supplies its services to both of them. But when it has performed these introductory services it will usually withdraw, and the continuing contractual relationship will be directly between worker and employer.

There are few hard and fast rules in this field. The one exception is the supply of HGV drivers; here the bureau always acts as agent for the client, as there is a legal requirement that the transport operators themselves become the employer.

Bureaux involved in the supply of fashion or photographic models usually act as agent of both client and model; and in the nursing agency field, the trend has been for agencies to be agents when providing nurses and qualified staff but principals when providing unqualified auxiliaries. However, these are only trends. You must consider each case on its merits, using the guidance below. VTAXPER67200 sets out indicators of each of the four possible scenarios listed above. When you have decided which of the four situations applies to your bureau, VTAXPER67400 and VTAXPER67500 explain the accounting consequences of your decision.