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ARC disappointed by lack of change to VAT charges in Budget

However it is disappointed that Mr. Osborne has not made any change in respect of VAT charges for the supply of agency workers to non VAT registered organisations, including government departments, local authorities and charities.

Adrian Marlowe, chairman of ARC, said “Agency workers are a specific resource that should be readily available to all these organisations, but the inability to recover VAT deters their use as VAT is currently chargeable on the pay provided to the worker.

This is particularly so, ARC maintains, in the case of the NHS in respect of which HMRC has in February embargoed the recovery of VAT where agency workers are used.

Marlowe continued “All these organisations need every penny they have to provide the services they are required to deliver on increasingly tight budgets. Whilst the Treasury recovers the VAT, and as such this helps towards the deficit, public services are affected not just by imposed budget restrictions but also by this tax.”

“We have long campaigned for reinstatement of the VAT staff hire concession which was dropped by the government in 2009. Partial exemptions were reintroduced for limited medical services a few years ago but we believe its reintroduction across the board for those types of organisations that cannot recover the tax but provide frontline services would not only make available more resources but also lead to improvement in services and greater employment.”

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