Adecco UK Ltd & Ors v Revenue & Customs, [2018] EWCA Civ 1794

The appellants ("Adecco") were employment bureaux supplying clients with temporary staff ("temps") who were not employees of Adecco. Adecco introduced them to clients looking for a temporary worker to undertake an assignment, and if the temps accepted an assignment, Adecco paid them for the work they did for the clients.

Following the finding in Reed Employment Ltd v Revenue and Customs Commissioners [2011] UKFTT 200 (TC) that the bureau in that case effectively paid the temp workers as agents for the clients, so that it was only its commission that was subject to VAT, Adecco sought a VAT refund of the portion of its charges to its clients that reimbursed it for the compensation of the temps.

Although Adecco could not direct the temps as to how to carry out their assignments, had no effective control over when the assignments ended and did not conduct any appraisals of the temps, it nonetheless was found to be making a supply of their services to the clients (rather of only an introductory service) so that it had been correctly treating all of the amounts received from the clients as subject to VAT.

Points noted by Newey LJ in support of this conclusion included that there was no contract between the temps and the clients, the contracts referred to their services being provided "through Adecco," it paid temps on its own behalf, not as agent for the clients, and Adecco charged a client a single sum for each hour a temp worked, i.e., it did not split its fees into remuneration for the temp and commission for itself, the same contract between Adecco and a client was used in irrespective whether Adecco was providing a non-employee or employee.

An employment bureau (Adecco) introduced temporary staff ("temps"), who were not Adecco employees, to clients looking for a temporary worker to undertake an assignment, and if the temps accepted an assignment, Adecco paid them for the work they did for the clients – and collected those amounts plus a mark-up from the clients.

Newey LJ essentially found that Adecco was not paying the temps as agent for the clients, so that the full consideration received by it from the clients was subject to VAT rather than just the “commission” earned by it.

It was helpful to Adecco’s case that it could not direct the temps as to how to carry out their assignments, had no effective control over when the assignments ended and did not conduct any appraisals of the temps. However Newey LJ noted that there was no contract between the temps and the clients, the contracts referred to their services being provided "through Adecco," and Adecco charged a single sum for each hour worked rather than breaking out the commission portion.