The VAT Staff Hire Concession will be withdrawn from 1 April 2009. Following its withdrawal, all businesses making supplies of staff as a principal will have to account for VAT on the full value of their supply. The full value of the supply includes the remuneration element and any PAYE, National Insurance contributions, pension contributions and similar payments relating to the worker.
Businesses affected include employment bureaus whose main business activity is supplying staff, or any other businesses making a supply of staff. Those receiving supplies of staff who are unable to recover any or all of the VAT on those supplies, for example those in the financial services, education, healthcare and charity sectors and members of the public, will also be affected because their suppliers will charge VAT on the full value of the supply of staff.
For full details see here