Virtual Schoolbag (VSB)

13 Dec 2017
Business managers, bursars and secretaries, governors, headteachers of all schools
Priority / Statutory requirement
Update - VAT Treatment of Supplies of School Staff

This guidance is to make schools aware of the tax liability in relation to seconding school staff, as the amounts involved can be considerable, it is important that VAT is treated correctly to avoid potential financial penalties and interest from HM Revenue and Customs.

Secondment or Supply of staff to another organisation


There is a supply of staff for VAT purposes if, for a consideration (money or payment in kind, including expenses), you provide another person with the use of an individual who is:

  • contractually employed or otherwise engaged by you

There is a supply regardless of whether the terms of the individual’s employment or engagement with you are set out:

  • in a formal contract or letter of appointment
  • are on a less formal basis

VAT must be charged at 20% and a VAT invoice issued to the external organisation for example, an academy or nursery.


There are a few exceptions within the education sector where VAT does not apply to supplies of staff .

    1. Supply of teaching staff to another provider of education For example, where a teacher is seconded to an academy and is involved directly in the provision of education to students at the school, or a laboratory assistant is seconded to a further education college and assists in classes for the college's students, both of these supplies will be VAT exempt.

                2.  A staff secondment where only personnel from the council can fulfil that role because of a statutory arrangement  would be treated as outside the scope of VAT.



Other situations where VAT does not apply

  1. Temporary Suspension of a contract

If you suspend an employee’s contract to enable them to take up a temporary post elsewhere you are not making a supply of staff provided that:

  • the temporary post is organised on the employee’s own initiative, and
  • the second employer issues to the employee a new contract or letter of appointment


  1. Joint Employment

Where staff are jointly employed there is no supply for VAT purposes between the joint employers. Staff are jointly employed if their contracts of employment or letters of appointment make it clear that they have more than one employer.

  1. Payroll Service

Recovery of monies paid out by the payroll provider is not subject to VAT as it is a disbursement. VAT must be accounted for on any amount charged over and above the reimbursement of the costs paid out on their behalf.

For queries, please contact the VAT Team;

Karen Regan 01273 482573 or Maxine Fifield on 01273 335663

Maxine Fifield
Maxine Fifield
Senior Finance Officer - VAT Team

Phone: 01273 335663
Karen Regan
VAT Manager

Phone: 01273 482573
Email: karen.regan@escc.internal