Can VAT be recovered where a trust uses IT staff supplied by an employment agency to supplement its in-house IT team? This is another area where there has been some doubt concerning entitlement to COS recovery under Heading 14 ‘Computer services supplied to the specification of the recipient’.
In the light of HMRC’s recent updated COS guidance we have reconsidered whether such services now qualify for recovery and sought confirmation from HMRC.
HMRC has responded to our request for a ruling with an unequivocal answer – there is no scope for recovery where the agency staff are working to the instructions of the trust.
If IT agency staff are being used as an integral element to the provision of a fully managed IT infrastructure, there is possible scope for recovery. However, any agency staff would have to be working to the instructions of the contractor and the contractual arrangement will need to be clearly defined. Nevertheless, the rules concerning VAT recovery on fully managed IT services are complex and we recommend that you discuss this with your advisor before proceeding with VAT recovery.
Liaison offers a free NHS VAT helpline so for more information contact us on 0800 700 652