Nursing Agencies VAT Concession and Umbrella Companies

Usually, recruitment agencies must charge VAT when they supply staff to an end-hirer. The Nursing Agencies Concession exempts agencies from charging VAT where the staff supplied are registered nurses, unregistered nurses working under the supervision of registered nurses or nursing auxiliaries, where the services provided form part of patient medical care, such as administering drugs or taking blood pressures.

Where the agency supply qualifies for the concession in supplying nursing staff directly to the end-hirer (for example an NHS trust) the agency doesn’t have to charge VAT.

The concession is intended to reduce the cost of medical staff, so you could be forgiven for expecting it to apply to the whole supply chain. In fact, we’ve spoken to several agencies who did not expect to pay VAT because of the logical belief that the concession would apply to umbrella companies.

However, HMRC’s view is that the concession applies only to the supply of nursing staff to an end-hirer by the agency, not to the agency by a third party (for example an umbrella company).