Yes, VAT will be charged on the full amount. This was confirmed by the Court of Appeal in the case of Adecco UK Limited and others v HMRC in 2018.
By engaging a temp or interim worker, you are paying for the time of a person, not for a specific task completed (e.g. a wall built, or webpage coded). Most agencies include a line in the contract that if you are unhappy with the worker you can ask for a replacement, but this normally only applies within 2 to 4 hours of the start of the assignment depending on booking length - i.e. raise your concerns as soon as possible with the agency. If you want a specific task, then you can enter into what is called a 'Statement of Work'.
Agency fees will vary between around 10% to 30% of the worker pay, depending on whether the client negotiated a bulk-discount rate, availability of the worker, and client size. Note that some agencies will express their rate as a margin, rather than a mark-up, to make it appear cheaper. TempaGoGo can help you negotiate better rates, by making it easy to send your staffing need to multiple agencies, allowing you to quickly compare prices.
Agencies sometimes use a subtle vocabulary that can increase your agency bill by a few percentage points. So what is the difference between mark-ups and margins?
So what does that mean in real terms? Imagine that your candidate is paid £100/hour:
At TempaGoGo we avoid the use of jargon, and help you to see in absolute terms what each agency is charging in terms of pay, statutory charges and fees.