If you have ever wondered what bearing VAT registration (and the National Minimum Wage) have on employment status you can now find the answer, or part of it. Recent updates to HMRCs Employment Status Manual include the addition of a new chapter: ESM5000.
Where employees act on behalf of their employers, they are not 'taxable persons' and their activities are therefore outside the scope of VAT. If self-employed they would be 'taxable persons'.
Following this HMRC says: "If a trader is chargeable to both employment income and trading income, then only the gross monies earned from the work chargeable under trading income should be considered as being potentially subject to VAT and for which registration may be appropriate."
Exceptions to normal practice: