HM Revenue and Customs Brief 12/10
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Issued 18 March 2010
VAT – provision of health professionals, nursing auxiliaries, care
assistants and support workers by employment businesses – clarification of
This brief aims to clarify our policy on the VAT treatment of supplies of
health professionals, nursing auxiliaries, care assistants and support workers
by employment businesses.
The Employment Agencies Act 1973 defines an 'employment business' as a
'business (whether or not carried on with a view to profit and whether or not
carried on in conjunction with any other business) of supplying persons in the
employment of the person carrying on the business, to act for, and under the
control of, other persons in any capacity'. 'Employment' is construed widely to
include engagement on a contract of employment or a contract for services.
'Health professional' is an individual enrolled or registered on the
appropriate statutory register including any and all of the following:
- Dentist or Dental Care Professional – an individual registered with the
General Dental Council
- Doctor – an individual registered with the General Medical Council
- Nurse, midwife or community public health nurse – an individual registered
with the Nursing & Midwifery Council
- Individuals registered by the Health Professions Council – including:
– Arts Therapist
– Biomedical Scientist
– Clinical Scientist
– Occupational Therapist
– Operating Department Practitioner
– Speech & Language Therapist.
'Nursing auxiliary' – an individual who is not enrolled on any register of
medical or health professionals but whose duties must include the provision of
medical, as well as personal, care to patients.
'Care assistant' is an individual who is not enrolled on any register of
medical or health professionals but who provides both medical and personal care
to the recipient.
'Support worker' is an individual providing personal care and support
services that may or may not be directly connected with the welfare of the
'Medical care' – in the context of what is provided by nursing auxiliaries
and care assistants, includes monitoring the health of patients, for example, by
taking blood pressure and temperatures, as well as administering drugs to
patients under the direct supervision of a health professional.
'Personal care' – includes washing and dressing, feeding, helping people to
mobilise, bed making, toileting etc., but does not include medical care.
Employment businesses in the health and welfare sector: basic VAT position
Staff supplied by an employment business may be either employees of that
business, or self-employed and engaged by an employment business. In both cases
the workers’ services are provided to the employment business, which in turn
makes a supply of that worker to the client. If the worker comes under the
direction and control of the client, this is a supply of staff. The employment
business must therefore account for VAT when appropriate on the full charge to
the client as in these circumstances it is acting as the 'principal'.
However, if the employment business maintains the direction and control of
its staff to make a supply of welfare or medical services directly to the final
consumer, we would see it as providing health or welfare services rather than
merely a supply of staff. In these circumstances, subject to relevant criteria,
we would see the business as making an exempt supply of welfare or health
services – see Public Notices 701/2 Welfare and 701/57 Health Professionals and
the section headed 'Supplies of Contracted out Welfare Services' below.
Supplies of registered health professionals (other than nurses, midwives and
community public health nurses)
When an employment business supplies registered health professionals as a
principal to a third party, where the health professional is working under the
control and guidance of the third party, it is making a taxable supply of staff
to that third party – not an exempt supply of healthcare or welfare services. It
is the third party which is responsible for providing healthcare to the final
patient, rather than the business supplying the staff which has no such
A taxable supply of staff is made even where the employment business is
responsible for ensuring that the workers it provides are properly trained and
qualified when they work under the control of the third party.
Supplies of locum GPs
Where an employment business supplies a locum GP to a practice, the
employment business’ only responsibility is to make a taxable supply of staff to
the practice, not exempt healthcare to the final patient.
Supplies of nurses, nursing auxiliaries and care assistants by state
The nursing agencies’ concession
By concession (HMRC regularly reviews these), nursing agencies (or employment
businesses that provide nurses and midwives, as well as other health
professionals) may exempt the supply of nursing staff and nursing auxiliaries
supplied as a principal to a third party, if the supply is of:
- a person registered in the register of qualified nurses and midwives
maintained under article 5 of the Nursing and Midwifery Order 2001
- an unregistered nursing auxiliary who is 'directly supervised' by one of
the above, or
- an unregistered nursing auxiliary, whose services are supplied to a
hospital (NHS or private), hospice, care home with nursing under item 4 of
Group 7, Schedule 9 VAT Act 1994 and form part of the care made to the
The institution to which staff are supplied may be operated by a local
authority, NHS body, charity or other organisation operating in the public or
To qualify for the concession, the employment business must be registered
with one of the following organisations:
- Care Quality Commission (formerly known as the Commission for Social Care
- Scottish Commission for the Regulation of Care
- Care Standards Inspectorate for Wales, or
- Northern Ireland Health and Personal Social Services Regulation and
For the supply of nursing auxiliaries or care assistants to benefit from the
concession, they must undertake some direct form of medical care, such as
administering drugs or taking blood pressures, for the final patient. The
concession does not apply to supplies of general care assistants who are only
involved in providing personal care such as catering, washing or dressing the
patients or who are working in care homes without nursing where they do not
require supervision by health professionals to provide their services.
However, where a state-regulated domiciliary care agency supplies the
services of its care assistants directly to the final patient, we would see the
agency as making an exempt supply of welfare services – see Public Notice 701/2
Welfare and the section headed 'Supplies of contracted-out welfare services'
Supplies of contracted-out welfare services
As is clear from above, employment businesses in the welfare sector make a
taxable supply of staff to third parties, such as local authorities, if the
third party is legally responsible for the onward supply of providing care to
the final recipient. This is subject to the nursing agencies’ concession. The
mere fact that an employment business is state-regulated does not mean that its
supplies of staff are exempt if they are not covered by the nursing agencies
However, when state-regulated welfare providers provide welfare services to
the final consumer, these services remain exempt even if they are contracted and
paid for by a local authority or other third party. For example, a local
authority may contract out the provision of domiciliary care services for the
elderly or disabled to a state-regulated domiciliary care agency. Although the
local authority rather than the final consumer may pay the domiciliary care
agency charities for the care services, for VAT purposes the care agency has
still made an exempt supply of welfare services rather than staff to the local
authority. This is because the care agency’s staff will still be working
directly to the agency itself throughout the provision of the services rather
than to the local authority.
Exemption would also apply to cases where a local authority or other body
subcontracts the provision of adult placement schemes. Under these schemes a
‘worker’ provides personal care and/or support services to adults living with
them or living in their own homes. Currently scheme providers need to be
registered with the Care Quality Commission.
Sometimes local authorities make payments directly to people who have been
assessed as needing help from social services, and who would like to arrange and
pay for their own care and support services instead of receiving them directly
from the local council. These arrangements are called direct payment schemes,
and any welfare services provided to the recipient by a charity or
state-regulated private institution or agency are again exempt from VAT.
The wording of terms and conditions of agreements
We are aware that some employment businesses state in their contract terms
that their staff are still working under their control and direction rather than
the third party to which their staff are being supplied. If that is the case you
are no longer acting as an 'employment business' within the definition of the
Employment Act 1976. You are reminded that the VAT liability of a supply is not
determined conclusively by the terms of any contract or other documentation
alone. If the wording of a contract does not reflect any changes in the way that
the business actually operates in practice, the VAT liability of a taxable
supply of staff will not change.
If businesses can demonstrate that they have taken reasonable steps to follow
our previous guidance and that has resulted in their applying the wrong VAT
treatment then we will take that into account when considering whether any
corrective action is necessary.
Our public guidance will be updated in due course. If you are unsure of the
correct VAT treatment of your supplies you should consult Notice 701/57 Health
professionals and/or 700/34 Staff . You may also contact our Helpline on 0845
010 9000, by email, or by writing to:
HM Revenue & Customs
National Advice Service
Written Enquiries Section
Please include your VAT registration number and the name and address of your
business in any correspondence.
About the Author
© Crown Copyright 2010.
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Article Published/Sorted/Amended on Scopulus 2010-06-14 12:01:34 in Tax Articles