VAT is not optional. If your agency tells you it does not need to register or charge VAT, that should be a serious warning sign. In health and social care staffing, the risks of ignoring VAT are too big to overlook.
The £90,000 Threshold Is Real
On 1 April 2024, the VAT registration threshold rose to £90,000 in taxable turnover within any 12 month period. It remains at that level in 2025.
For staffing agencies, taxable turnover is not just their margin. It includes the full amount billed to clients: wages, employer NI, pensions, holiday pay and the agency’s fee.
This means even a small agency running a handful of shifts a week can cross the threshold quickly.
No VAT Registration Means a Red Flag
If your agency says they are not VAT registered, there are usually only three explanations.
- They are very small and not a credible supplier.
- They have labelled workers as self employed and only count their margin. This may not be compliant.
- They are breaking the law.
HMRC has already acted. In one case, an agency was told to recover £1.2 million in VAT from its clients. The cost fell back on providers.
The Nursing Concession Will Not Save You
Some providers think the HMRC “nursing concession” is a way out of VAT. It is not.
The concession only applies in limited situations and only to specific bookings. Even if a booking qualifies, the agency still has to register once its total turnover exceeds the threshold.
Why Ignoring This Could Cost You
HMRC does not overlook VAT errors. Providers can be hit with penalties, interest and unexpected bills. In some cases the burden has landed directly on the organisations that used the agency.
What You Should Do
- Ask your agency to explain their VAT position clearly.
- Check invoices to see how VAT is applied.
- Treat vague answers or excuses as a warning sign.
Better to challenge today than write a six figure cheque tomorrow.
How Florence Can Help
At Florence we do things by the book. Our Neutral Vendor Agency Manager solution goes further. It ensures every agency you work with is properly vetted and compliant. This protects you from agencies that avoid VAT registration or misapply the rules.
With Florence you have oversight and confidence. Every agency supplying your staff is following the law, and you will not face a surprise VAT bill in the future.
Speak to us today to see how Florence can take VAT risk off your desk and give you peace of mind.