HMRC issued ‘new’ guidance last April regarding VAT recovery on agency fees. We included this guidance in a VAT update which was sent to all of our clients.
The guidance stated that VAT on agency commission fees for nurses can be recovered under COS heading 41 and VAT on agency fees for secretarial, telephone and clerical staff, IT staff, etc can continue to be recovered under COS heading 69. Accounting services can continue to be recovered under COS heading 1.
VAT on pure staff secondments and agency fees for medical staff other than nurses cannot however be recovered under any COS heading. This is generally doctors/locum services but also relates to other medical staff such as radiologists, pharmacists, pathologists, etc.
Up until this guidance was issued, NHS organisations had always recovered the VAT on all agency staff irrespective of whether they were nurses or doctors, with the full knowledge of HMRC.
We would like to reiterate our advice to any Trust that has misunderstood the guidance or where it has not been disseminated to accounts payable staff to cease recovering the VAT on doctors/locum agency fees.