Nursing Agencies – Don’t Get Caught out by VAT

Recently, Orange Genie Umbrella have spoken to a number of nursing agencies who did not expect to pay VAT on our invoices. This is because the supply of nurses by agencies is usually covered by the Nursing Agencies Concession, and VAT is not usually due. These agencies have, quite reasonably, assumed that the concession would still apply when their nurses are employed by umbrella companies.

However, as far as HMRC are concerned, the concession only covers the supply of nurses by an agency to an end user (for example an NHS hospital or trust) and any other transactions – including the supply of staff by an umbrella company to an agency – are not covered.

This means that where nurses are employed by an umbrella company, the umbrella will have to charge VAT.

End clients will not expect to pay VAT on the supply of nurses so while agencies will be able to recover any VAT paid on the supply of staff on their VAT return, it may affect their cash flow and they should plan accordingly.

If you are a nursing agency and your umbrella company is not charging VAT, you may want to consider changing supplier. If HMRC challenge the umbrella they may invoice the un-charged VAT up to you, so you are at risk of having to pay a substantial unexpected cost. As a responsible agency, you’ll want your nurses to be employed by trustworthy experts, and not charging VAT in this instance is a basic error that should raise serious concerns.

You can find a detailed explanation of this issue here.

If you have any questions about the Nursing Agencies Concession or if Orange Genie can help in any way, please call our expert team on 01296 468483 or email

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