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HMRC reconfirms our understanding.

In recent months we have seen a significant increase in marketing from providers suggesting they can operate the nurses VAT concession on umbrella workers operating through agencies. These messages are contrary to the guidance we had from HMRC many years ago. As there was growing confusion in this area, we asked HMRC to confirm whether their views had changed on the interpretation of this concession, the following is the response we have just received from them:

‘the Nursing Agency Concession [NAC] does not apply to umbrella organisations. This is because there is another party sitting between the employment business and the end user, which means the employment business is one stage removed and so cannot benefit from the concession. HMRC regularly reviews concessions but has not made any changes to the NAC since 2010.Our position in relation to the interaction of umbrella organisations and this concession has also not altered.

This is clear and we will continue to apply this approach to our compliance standards for any umbrella provider operating in the medical sector. Recruitment companies using providers that fail to apply the rules correctly could find themselves facing a significant VAT liability at some point in the future. Even where the recruitment company believes they are protected by the contractual terms signed there are real risks of those non-compliant providers failing financially with all the associated risks that come with that. We believe that Professional Passport is the only compliance standard currently applying these rules as directed by HMRC and will refuse to accredit any provider that fails to charge VAT by relying on the NAC.

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