HMRC have confirmed that the supply of temporary staff to the construction industry is NOT covered by the reverse VAT regulations that will be coming into effect in March. This means that we will continue to charge VAT on behalf of HMRC to our clients and VAT will be payable to us by our clients in the same way as it is now.

Businesses who supply staff and who are responsible for paying the temporary workers they supply, are not subject to the reverse charge. Read the advice on the government website

Here is the relevant section:

3. Employment businesses supplying construction workers

Employment businesses are treated differently for the purpose of the reverse charge. Supplies by employment businesses are not subject to the reverse charge, even if those supplies are within the scope of CIS.

Employment businesses supplying construction workers are, for VAT purposes, treated as supplying staff rather than building and construction services. For VAT purposes, such activities of workers are supplies of staff by their employer and not supplies by the workers themselves. The supplier makes a supply of staff for VAT purposes if it provides another person with the use of an individual who is: ·

- contractually employed or otherwise engaged by the employment business

- a director of the employment business

A similar situation arises with joint ventures, the construction firms that are parties to the joint venture provide workers on secondment to work on the joint venture project. Payments by the joint venture to each construction firm for their staff is not payment for construction services and therefore not subject to the reverse charge.

I am sure you will want to check with your own tax advisors but based on the information above we will continue to charge VAT on our invoices and pay that VAT to HMRC.