247Time hits back over NHS VAT savings criticisms

Vendor management solutions firm 247Time has hit back at media criticism of a service it offers that aims to save the NHS from paying VAT on the supply of temporary agency staff.

Thu, 4 Jul 2013Vendor management solutions firm 247Time has hit back at media criticism of a service it offers that aims to save the NHS from paying VAT on the supply of temporary agency staff.

And despite HM Revenue & Customs (HMRC) saying it is “actively looking into” services and schemes that reduce VAT on the supply of workers, 247Time’s managing director tells Recruiter that there are no plans to alter or withdraw the service.

Last week, ITV News highlighted a 247Time service launched in January aimed at NHS trusts. According to 247Time’s website this “ensures that you do not pay VAT on the pay element of temporary worker charges, typically saving you 20% of your total cost.”

The same report highlighted a scheme operated by accountancy firm PwC, which was attacked by the chair of the Public Accounts Committee Patricia Hogg as “aggressive tax avoidance” – a charge strenuously denied by PwC.

PWC’s STAFFflow scheme, which has been running for around 18 months is used by around 30 NHS Trusts.

As recruiter.co.uk reported on Monday (1 July) by allowing NHS Trusts to directly employ staff for short periods, and even single shifts rather than using agency staff, STAFFflow saves the NHS millions of pounds.

This is because, unlike for temporary agency staff, no VAT is payable on the salaries of direct employees. A variation of the STAFFflow model allows trusts to engage staff through a limited company for the duration of the locum placement, again saving VAT.
 
David Brooks, managing director of 247Times tells Recruiter that the ITV News coverage was “slightly unfair”.  

“We don’t take a percentage of the VAT savings; we charge a fixed fee, it’s pence,” he says.

And unlike the PwC scheme, where the staff become employees of the NHS trust and enter into a contract of employment with that trust - in some cases covering just a single shift, no such contractual arrangement exists between workers and NHS trusts in 247Time’s service, he says.
 
Brooks points out that as a company on G-Cloud, the government’s cloud computing and ICT system framework agreement, “we have been approved by the Government Procurement Service (GPS) to provide our services”.

Despite HMRC looking into these schemes, Brooks says the company has no plans to change or withdraw its service. “What we do is nothing illegal, why would we alter it?”
 
“We have taken tax advice which has confirmed that the VAT mitigation method which can be facilitated through the use of 247Time complies with HMRC rules.”
 
“In any event, we have not and are not currently supplying this VAT mitigation method to any clients, including to the NHS.”

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