Recharging Apprenticeship Levy as part of a reimbursement for staff supplies

Following queries from a charity member CTG contacted HMRC to seek confirmation of Apprenticeship Levy’s place in the two concessions relating to staff recharges.  These were the concession in VAT Notice 701/1, para 5.17 (secondment between non-profit bodies), and the payroll transfer concession for non-staff hire businesses.

The issue was whether payment, in either scenario, of a sum relating to the Apprenticeship Levy burden arising on the employer occasioned by that staff member, could be regarded as an employment cost and thus added to the charge (or the payroll cost as regards the second concession) without disabling the provisions in the concessions.  The importance of this is that, should HMRC take issue with a recharge of apprenticeship levy, it could deem the concession to be wholly non-applicable, thus applying VAT to the entire cost of the staff in question.

Happily, HMRC has confirmed that they view Apprenticeship Levy as a cost of employment per se, and thus that the cost attaching to the staff in this respect can be added to the recharge, or payroll cost, without threatening the concession.