10,000 UK outsourcing jobs may face chop

Thousands of jobs in the financial outsourcing sector are at risk if the
Treasury interprets a European Court of Justice VAT ruling to its extreme.

The warning from businesses in the sector comes as the European Commission
plans to take the court ruling, based on the EU’s sixth VAT directive, into
account. In March the courts ruled that the financial services industry must pay
VAT on all domestic outsourced work.

The move could see as many as 10,000 British jobs at risk, with the roles
sent abroad to eastern locations.

But financial services companies and outsourcers have complained that the
government is looking to implement the legislation without conferring with the
Commission on the possibility of the VAT directive being updated, which could
annul the court ruling.

‘We are bound to implement the ECJ decision and UK legislation will need to
be changed accordingly,’ a Treasury spokesman told The Times.

The spokesman said that a consultation was also running between financial
services and outsourcing industries to gauge the potential effects of the
ruling, until 30 September.

Related reading

Life Belt with Computer Folders