VAT on temporary employment costs

The decision in Reed provides possible grounds for reducing VAT on temporary employment costs. It argues that, as a matter of economic reality, Reed did not supply staff, even when acting as principal, as it never controlled them, so VAT was only due on a commission basis. HMRC have avoided addressing these arguments and maintain that only employment agencies can account for VAT solely on commissions. The Reed decision may be sustainable based on its historic facts. But we need to consider how employment bureaux operate currently to consider if it remains applicable. A new case may be needed to progress the issue further.