TC09663 - [2025] UKFTT 01250 (TC)

Section 44(1)(a) does not require an obligation - whether contractual or otherwise - on the worker’s part to provide services personally. Rather, it refers simply to the fact of whether the worker did personally provide services: K5K, at [199(1)].

The Appellant is incorrectly focussing on the service that it provides to its clients, rather than the statutory question of whether the relevant individual has personally provided services to the client; irrespective of whether another thing (e.g., a form of equipment) was also provided at the same time.

For the purposes of s 44(1)(a), the search dogs are treated like any other piece of specialist security equipment operated by trained personnel. Working dogs are treated as ‘plant’ on the basis that they are an apparatus with which the trade is carried on, that has an expected life of two years or more. HMRC’s Guidance “CA21220” specifically cites the example of a guard dog: see also Yarmouth v France, in which a horse was found to be plant.

The dog detection services provided by the Appellant depend entirely on the handler’s work. The simple fact is that in respect of every engagement for which the Appellant was paid, a dog handler did personally provide services to the end-client, along with the dog.

The Appellant is wrong, as a matter of law, to state that supplies of ‘labour’ are not VAT-able supplies. It is well established that supplies of staff are taxable supplies for VAT purposes. In Moher, the taxpayer was held to be making a taxable supply of medical staff. The taxpayer had submitted that the supply was of medical services, and so was exempt.

The fact that the ‘agency’ - within the meaning of s 44(1)(b)(ii) - may be making a taxable supply for VAT purposes does not affect the application of the Agency Rules. In Adecco, the taxpayer paid PAYE and NICs in respect of temporary staff they supplied to end-clients ([5(2)]). This did not preclude a finding that the taxpayer was making a VAT-able supply of staff: see also Moher, at [10]. Whether, for VAT purposes, the supply constitutes a simple supply of staff, or a supply of some other service, or a composite supply, is also irrelevant to the application of the Agency Rules. The Agency Rules require merely that it be shown that either the ‘agency’ or the client exercise SDC over the individual. It does not matter whether that SDC is exercised by one, the other or both.