According to a report on contractoruk.com, discussions between Treasury
officials and recruitment representatives last week resulted in an unlikely
withdrawal of the proposal by Chancellor Alistair Darling.
Critics of the move say the dropping of such a concession will cost end users
an estimated £400m.
The concession currently allows agencies supplying staff to employers who are
unable to recover VAT to exclude VAT from the wages element of their costs.
Under the proposal, agencies must charge VAT on all supplies of temporary
staff. The move is scheduled to come into effect from April 2009.
Kevin Green, chief executive at the Recruitment and Employment Confederation,
is urging the government to reconsider removing the VAT staff hire concession.
‘Removing the concession will add £400m to employer costs at a time when key
sectors like charity, financial and health-care can least afford it,’ he said.
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