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Taxable staff
The taxpayer supplied staff to private day nurseries, pre-schools and local education authority schools. HMRC said that the services supplied by the taxpayer were not exempt under VATA 1994, Sch 9 group 7, health and welfare. The taxpayer's appeal to the VAT tribunal succeeded, so HMRC appealed to the High Court.
The judge said that although the services of the staff were supplied to institutions which were regulated by the state and that those regulations required the institutions to ensure the suitability of staff supplied, this did not mean that the taxpayer was itself making supplies of welfare services. Furthermore, even if it were correct that the staff supplied by the taxpayer were subject to regulation, it did not follow that the taxpayer was state regulated.
HMRC's appeal was allowed.
HMRC v K&L Childcare Service Ltd, Chancery Division, 4 November 2005
