Note: If you're looking for information on Employer taxes in the UK click here.
AGENCY TAX SUMMARY FOR THE UK
RecruitiFi is outside the scope of the UK and EC VAT. Payments from RecruitiFi will not include VAT, nor does the Agency need to provide VAT payments to HMRC for UK hires.
UK VAT determines place of supply by the location the customer receives the services. Refer to Section 2 of this notice from HMRC for more details.
RecruitiFi is located in the U.S., and has no locations in the UK or any EC Member State.
Agencies are providing the services to RecruitiFi in the U.S., and not to the client directly, so the services are "outside the scope of UK and EC VAT." See section 2.3 of the above article from HMRC for clarification.
But I have a contract with the Employer, and they're in the UK. Shouldn't I be charging VAT to the Employer?
No. Technically, Agencies are not directly contracted with any Employers. The Employers are contracted with RecruitiFi and pay RecruitiFi for the services. All Agencies are also contracted with RecruitiFi, and RecruitiFi pays the Agencies as consultants.
Even if an Employer and an Agency had a prior relationship, the RecruitiFi Terms supersede their previous contracts for the duration of their engagement through RecruitiFi.
Whether the Employer is located in the UK does not factor into the tax situation.
Since I'm providing the services in the U.S., is there U.S. sales tax?
As mentioned in Section 2.2 of this document by HMRC, local sales and service taxes still apply in the place where those services are received. All Agency services are received by RecruitiFi in New York state. Services are not taxed in New York, so there is no need to collect or pay local sales tax in the U.S.
Tags: Tax, Taxes, VAT, Income Tax, UK, United Kingdom, Agencies, Agency