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HMRC internal manual

VAT Taxable Person Manual

HM Revenue & Customs
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Particular trades: employment bureaux including nursing agencies: accounting consequences (nursing agencies)

Where a nursing agency acts as principal in the supply of nurses or auxiliaries, it makes one supply to the client. This supply will be exempt if:

  • the supply is of the services of a medically registered person under Schedule 9, Group 7, Item 1 of the VAT Act 1994; or
  • the service is performed by a person under the direct supervision of a medically registered person. This includes the supply of nursing staff (qualified or not) for work in a recognised hospital or similar institution.

The supply will be standard-rated in all other cases; that is, if the nursing care is not performed or directly supervised by a medically registered person. Where a nursing agency acts as an agent in bringing nurse and client together, it is involved in two supplies; its own supply of agency services, and the supply of the nurses’ services.

  • The supply of nursing services is not made by the agency, but by the nurse or auxiliary In practice, output tax will not be due on this supply, as the nurse or auxiliary will either not earn enough to exceed registration limits, or will be making an exempt supply under Group 7 of the exemption schedule, Schedule 9 of the VAT Act 1994.
  • The supply of agency services is made by the agency Output tax will always be due on this charge or commission, regardless of whether it is made to the nurse or to the client.

You will find fuller details of the liability aspects, including the text of Schedule 9 Group 7 in Notice 710/02/083 Agencies providing nurses and nursing auxiliaries.