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Claiming VAT Repayments From Locum Agencies

HMRC have lost a recent VAT case against Reed Employment Agency, which means that GP practices could claim back VAT that has been charged on the full supply of locum's since 1st April 2009. The outcome from this case is that VAT should only be charged on the commission element of supplying temporary staff; not the full cost of the staff’s pay. HMRC are not appealing against this case.

In April 2009 HMRC withdrew its staff concession which meant agencies were charging VAT on the full supply of locum's. As GP practices are generally not VAT registered and cannot recover the VAT, practices should make a claim against the locum agencies.

It is advisable for practices to review all locum agencies invoices’ since 1st April 2009, if VAT has been charged on the full cost to supply the locum, then you should contact the agency to make a claim for the overcharged VAT.