A supply of staff is in principle subject to VAT at the standard rate. By concession, 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 received by the seconding charity is not subject to VAT provided it does not exceed “normal remuneration”. Note that 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