Where businesses are considering seconding their staff towards key industries, there are a number of tax issues they should be aware of and consider.

VAT

Ordinarily the secondment of staff between businesses will attract standard rated VAT. Usually this will be VAT on the fees paid by the recipient businesses. If the recipient business pays the secondee directly and accounts for tax on those payments, these amounts will not be considered to be part of the fee which attracts VAT. 

In limited circumstances VAT may not apply, where the seconding and recipient business:

• are in the same VAT group;
• are able to form a VAT cost sharing group – which is only generally available to certain exempt and charitable businesses and the complexity may be off-putting. 

In addition thought might be given to:

• Given the government's deferral of VAT collection, should the recipient business be suggesting that payment terms for the VAT should be deferred until the output VAT becomes due to HMRC from the seconding business?
• Is the recipient business able to fully recover its VAT? Potentially businesses in the healthcare and financial service industries are unlikely to be fully VAT recovering. This might impact on pricing unless, for example, they are able to form a cost-sharing group. 

PAYE AND NICS

In most scenarios we would expect that the seconding employer will continue paying the wages of the employees to be seconded. In that scenario it will be the seconding employer who would remain liable for meeting the PAYE and NIC obligations in connection with the employees. More unusually the recipient business might pay the workers directly. In this scenario the recipient business is likely to be required to operate PAYE and NICs and so would need to prepare to administratively "on board" the worker on to the payroll. At present there has been no indication that employer's PAYE obligations will be deferred in the same way as VAT.