REC Comments On VAT Charges
April 1 sees the start of VAT being charged on the supply of temporary staff to some organisations including charities, banks and others who cannot reclaim VAT. The Staff Hire Concession has allowed agencies only to charge VAT on their margins, not on the wages of temps. The direct impact of this will be a cost increase in the supply of temporary staff to these sectors.
Commenting on the change, Kevin Green, Chief Executive of the Recruitment and Employment Confederation (REC) said: "Implementing a tax on jobs is not a sensible move during a recession. We are deeply concerned that the Governments decision to remove this concession will result in fewer jobs in the labour market. The REC has campaigned long and hard on retaining the concession and we are now alerting recruitment agencies and their clients to the change so they can make the necessary adjustments and ensure that VAT is charged correctly on the supply of temporary staff from today.
The REC has campaigned with other organisations representing the affected sectors since the decision to remove the VAT Staff Hire Concession was announced in the Budget Report in March 2008. Representations were made by the REC at the highest level to the Treasury and the Department for Business about the potential impact of this change to the charging of VAT.