Staff Hire Concession Solution?
Unfortunately, the intense lobbying carried out by the REC failed and on the 1st April The Staff Hire Concession was removed. However, there is a legal and cash friendly solution.
The Staff Hire Concession removal has attacked the ability of agencies to mitigate the cost of VAT for their clients not registered for VAT.
Removal of the concession meant that Agencies can no longer supply and pay Temps but Businesses must charge VAT on the whole of the invoice value - and not just the margin above wage costs. The consequence is an increase in cost of around 12% for clients not registered for VAT, typically those in the Health Care, Charity, Finance and Insurance sectors.
This cost increase will be the death of some temp business and none of us need that in times like these. However, agencies can give their clients a cost reduction and at the same time gain commercial advantage and do it all legally.
The solution is for the client to engage the workers - but this creates employment risk, payroll administration and additional and cash demands that clients dont always want.
Can be dealt be dealt with properly drafted Direct Temporary Hire contracts.
The payroll administration.
Can be dealt with by outsourcing to a professional payroll company.
Can be dealt with by dealing with a funding company.
VAT PAY from Cash Simply takes care of all that, pays the agency each time the temp gets paid and gives Client 30 day payment terms