A supply of staff is in principle subject to VAT at the standard rate. For example if a UCL member of staff was seconded to a body other than a charity and UCL retained control over the member of staff
during the period of secondment and was responsible for paying their salary and then recharging it to the recipient there will be VAT will be chargeable on the supply to the recipient.
- Where a member of staff is seconded by a charity to another charity and that member of staff has been engaged only in non-business activities of the seconding charity and will only be involved in the non-business activities of the receiving charity, the income is outside the scope of VAT provided it does not exceed "normal remuneration". Any other charges, for example for use of office facilities etc would still be subject to VAT.
There is a further concession which is not restricted to charities but can be used by them. If an employer seconds a member of staff and the recipient exercises exclusive control over the staff member and is responsible for paying the employee directly (and meeting all third party obligations such as National Insurance Contributions (NICs) etc) such payments are disregarded for VAT purposes. The concession will not apply if the employer derives any financial gain from:
- Placing the employee with the recipient; or
- Any other arrangements or understandings between the employer and the recipient.
It is important to distinguish between a supply of staff and a supply of services. If the individual remains under the direction and control of UCL then rather than supplying the individual there may be a supply of services instead. If UCL has the right to allocate any members of staff to the project that it chooses and can substitute a different member of staff it is likely that this is a supply of services. If those services are exempt then the supply is exempt. For example the supply will be exempt if someone is supplying ad hoc lecturing services or medical services.
Jointly employed staff
Where staff are jointly employed there is no supply for VAT purposes between the joint employers. Staff are jointly employed if their contracts of employment or letters of appointment make it clear they have more than one employer.