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The taxpayer company, A, supplied staff to B. B paid the staff direct and made relevant tax and National Insurance payments to HMRC.
The taxpayer claimed that the supply fell within the VAT staff hire concession and should not be treated as a chargeable supply of services.
HMRC disagreed, saying that the supply in question did not qualify as a supply of staff, and the taxpayer was not acting as an employment business.
The taxpayer appealed.
Mr Justice Sales in the High Court said that HMRC had interpreted the concession properly and had acted fairly in so doing.
He agreed that the taxpayer had not acted as an employment business. It had supplied staff to B, but they remained under the predominant control of the taxpayer rather than B.
The concession did not apply and the taxpayer should account for VAT in respect of the supply of the employees.
