Taxman eyes VAT on temps

The government has re-opened a debate about whether or not businesses should
pay VAT charges on temporary staff.

a Business Brief on HMRC’s website this week, the government said it wanted to
invite comments about withdrawing the ‘staff hire concession’
, which limits
the VAT bill on commissions charged by employment agencies.

Ann Swain, chief executive of the Association of Technology Staffing
Companies, said: ‘If organisations have to pay VAT on temps’ salaries, the cost
to UK plc of using temps is going to rise significantly. The government is
forever praising the contribution temporary workers make to UK competitiveness,
but if VAT is charged on temps’ salaries, organisations will use fewer temps,
and the flexibility of the UK labour market will be compromised.’

Stephen Coleclough, VAT expert at PricewaterhouseCoopers, said the move would
hit the financial services industry hardest, with the cost in the tens of
millions of pounds.

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