Advice please - NHS Contracting (via agencies) and VAT

[NotAllThere]

... I have already slightly adjusted my day rate based on this, but now they are saying they want to adjust it even more to allow for the client's oversight. I am not willing to drop my rate any further as the contract no longer becomes financially viable for me. ...

It seems you have no choice then. You can't work a contract that's not financially viable. Stick to your guns, tell the agency you can't reduce your rate further, and see what happens.

If it all falls down, write to the person in the client who interviewed you, apologising for it not working out, and expressing a hope that if something else comes up (VATable!) they'll still consider you. Don't contact the client for any other reason. The purpose of such an email/letter is to ensure the agency aren't playing silly buggers.

[hiredhands]

Thanks everbody.

As has been pointed out, it appears to be an issue between the agency and the client - the agency is stating that the client was unaware that the 20% VAT can't be claimed back on non-clinical staff and that they haven't budgeted accordingly. I have already slightly adjusted my day rate based on this, but now they are saying they want to adjust it even more to allow for the client's oversight. I am not willing to drop my rate any further as the contract no longer becomes financially viable for me. I find it hard to believe that the trust have now raised this as an issue, as I know for a fact they have hired a number of non-clinical staff via agencies and must have factored this in. Wondering if the agency is involved in a bit of funny business to try and maximise its profit?

I haven't signed a contract with the agency, nor do they have my sole right of representation - I don't know if I can legally go direct to the client (in which case I would be able to invoice directly, including VAT, and they could claim back and make the deal affordable), or if I have to let this one slide and try and find another contract - it was the agency that introduced me to the position, but having signed nothing I don't know where this leaves me. It would be a real shame for me to miss out on this position, as it is working in an area I am personally very keen on and would love to get involved in.

Anyone else had similar troubles with agencies, and, if so, are there any solutions for working around this issue?

Thanks in advance!

hiredhands

N.B. I should also add that I spoke to several other recruiting companies today who state that the NHS clients they have ALWAYS claim back VAT on non-clinical staff: is this still the case, or has the legislation recently changed?

[TykeMerc]

sorry - missed the fact there is an agent in the middle - I do all my work direct.

Yup, that's a completely different matter.
To be fair I have made the assumption since he mentions an agency up front that there's one in the payment/supply chain, it is only an assumption.

[Danglekt]

sorry - missed the fact there is an agent in the middle - I do all my work direct.

[TykeMerc]

The VAT has to be charged, the point they are making is the NHS Trust cant pass the VAT on as other companies do as they don't sell anything, so nothing to NET it off against, so haven't budgetted for the effective 20% increase in project resource costs.

Very common issue that I have seen a lot

Up to you to either swallow the 20%, argue the toss or move on.

Nope, it's the Agents problem, it's them charging the NHS. Now if the Agent wants to terminate the contract that would actually be quite fun to take to court, it's very easy to prove a financial loss.

[Danglekt]

The VAT has to be charged, the point they are making is the NHS Trust cant pass the VAT on as other companies do as they don't sell anything, so nothing to NET it off against, so haven't budgetted for the effective 20% increase in project resource costs.

Very common issue that I have seen a lot

Up to you to either swallow the 20%, argue the toss or move on.

[TykeMerc]

Your contract is actually with the Agency, not with the NHS body directly?

If that's the case then I believe you're obliged to charge VAT no matter what, there's no kind of exemption in place and just because the NHS can't reclaim the VAT doesn't mean they don't have to pay it to the Agency, that bit however isn't something you have any control over.

I'd tell the Agency that it's their problem, not yours and if they don't like it then beat them over the head with the contract.

I understand that various medical type professionals are unable to VAT register, but their suppliers have to so the likes of Dentists pay VAT to suppliers, but can't charge it.

[Sausage Surprise]

For what it's worth I'm working for an NHS body at the moment (non-clinical) and my invoices all include day rate + VAT and has never been questioned.

Likewise...done loads of IT gigs with the NHS and VAT was always payable

[DaveB]

For what it's worth I'm working for an NHS body at the moment (non-clinical) and my invoices all include day rate + VAT and has never been questioned.

[LisaContractorUmbrella]

Have a look at section 6.4 here https://www.gov.uk/government/public...-professionals

[hiredhands]

Hi both

Thanks very much for your advice. I suspect it is the agency trying to manage cost, as the client will probably be unwilling to pay 20% on top of what is being charged as both my day rate and agency fee if they cannot claim it back (it'll add about another £2000 to their monthly bill).

I haven't signed any right of representation in regards to the introduction, so wondering if it is worth going direct to the client and explaining the current situation, as it doesn't look like it is going to get resolved satisfactorily otherwise.

[Maslins]

Yuck. Client of ours had a similar thing very recently. Problem is nobody can really decide whether locum doctors/similar are providing medical services (exempt) or providing labour services (VATable).

Two agencies, one insisted was VATable, the other insisted wasn't.

Not quite the same situation, but it's a horribly grey area...happens a lot with VAT (eg the classic "is a jaffa cake a cake or a biscuit").

Possibly you can simply not charge them VAT, under the argument you believe you're selling medical services? Unsure how viable this is given what you do.

Otherwise does sound like a commercial argument, as to whether you're worth £480/day to them (based on NotAllThere's numbers) so they take the VAT hit, or whether you do by making your invoice £333.33+VAT.

[NotAllThere]

Is the plan to reduce your fee, so instead of e.g. £400 + VAT, they pay just £400 including VAT?

[hiredhands]

Hello all

I recently secured a 6 month non-clinical contract through an agency in an NHS Foundation Trust.

Having agreed the price, the client has now come back to the agency and stated they misunderstood the arrangements around claiming VAT back, stating that VAT can only be claimed back by NHS organisations on clinical interim positions.

Can anyone clarify if this is definitely the case? My day rate is going to suffer as a result if so - I think this is something that the agency should have made explicitly clear at the outset so that the client could set their budget accordingly, but it doesn't seem to have happened.

Any help much appreciated!

hiredhands