Page 15 - People Group - Joint Employment Features, Advantages & Benefits

HMRC Confirmation Letter - Page 1
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PEOPLE PAYE LIMITED
15A THREE HORSESHOES WALK WARMINISTER
WILTSHIRE
BA12 9BT
Date
VAT number
21 November 2018 XXX XXX XX
Dear Mr XXXXX,
Thank you for your emails dated 8 March 2018 and 27 July 2018 in which you set out specific VAT queries in relation to the proposed People PAYE Ltd model (PPL). It is my understanding that you wanted clarification regarding the application of VAT notice 700/34 with specific focus on what costs would be covered under disbursements between joint employers. I have now completed my review of the relevant legislation and guidance and can comment as follows.
Firstly, I had to consider if the agreement between parties constitutes a joint employment as per VAT notice 700/34. You provided sample contracts and supporting documents detailing the division of responsibility between PPL and an ‘agency’.
As far as employment costs are concerned guidance at VATSC06000 says “if staff are jointly employed by two or more parties it is not possible for one of the employers to make a taxable supply of the staff to another, even where it may charge part of the wages etc. costs of the staff.”
VAT notice 700/34 gives further advice on paymaster services. It states “Paymaster services can involve one company paying salaries and other expenses such as National Insurance and pension contributions. They commonly occur between associated companies in 2 situations:
 where employees are jointly employed by 2 or more companies and one company undertakes to pay salaries and the other expenses which it then recovers from the other joint employers
 where each of a number of associated companies employs its own staff, but one company (the paymaster) pays salaries and other expenses on behalf of the others who then pay their share of the costs to the paymaster
Information is available in large print, audio and Braille formats. Text Relay service prefix number – 18001
FF
I therefore agree that VAT notice 700/34 applies.
Phone 03000 xxxxxxxxxxxx Email xxxxxxxx@hmrc.gsi.gov.uk
Web www.gov.uk
If the working arrangement
adheres to the contracts provided then I would consider a legitimate joint employment exists.
Recovery of monies paid out by the paymaster in either of these situations is not subject to
VAT as it’s a disbursement. For more information about this see VAT guide (Notice 700).”
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peoplegroupservices.com
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