By concession, HMRC currently allow certain supplies of temporary workers by employment agencies to exclude the wages element when charging VAT, i.e. VAT is only due on the commission. It was announced in the March 2008 Budget that this concession will be withdrawn from 1 April 2009.
This will have the effect of further increasing irrecoverable VAT for the NHS on supplies of agency staff that are not eligible for COS VAT recovery.