Doomed

[swamp]

In which case, where does the:

Recruitment agencies calculate that the extra VAT will pile £400 million on to temp wage bills

Come from?

Dunno. But my back of the fag packet, ball-park estimate is:

10,000 (contractors in City) @ 500 per day for 220 days a year = £165m

165m + chuggers + other stuff = 400m ?

Sounds reasonable.

[DimPrawn]

It will only affect banks and charities as they can't register for VAT.

I thought banks were already using VAT registered subsidiaries to hire contractors.

As for charities, at least this will get rid of chuggers.

In which case, where does the:

Recruitment agencies calculate that the extra VAT will pile £400 million on to temp wage bills

Come from?

[swamp]

It will only affect banks and charities as they can't register for VAT.

I thought banks were already using VAT registered subsidiaries to hire contractors.

As for charities, at least this will get rid of chuggers.

[DimPrawn]

No, they'll recruit a million permies instead.

[Bagpuss]

Whether the loophole is fair or not, doesn't negate the fact that closing it will result in job loses.

[Solidec]

I don't see the issue. this should be seen more of a 12 years of benefit from a loophole rather than a "tax on jobs"

less sensationalism.

It may be a hard pill to swallow, but the move itself, to VAT on temp staffing, is completely valid, its a service at the end of the day.

Before companies had the double advantage of hiring temps without having to pay VAT and having the ability to fire them on a whim.

Now they must decide, the extra cost of using temporary workforce or the cheapness of hiring permie.

We contractors made the decision to be the former, business needs to make the same decision now.

Lets not bash the government for reverting this, they should have been lambasted for introducing the loophole in the firstplace!

[AlfredJPruffock]

Did somebody say - Doomed ???

Excellent - All going to plan then - carry on !!

[Platypus]

There are huge advantages in having a flexible workforce. Not that it stops the government treating us like tax evading glorified typists.

That's kinda my point - when does it become more economical to hire these folks than to have them as agency workers. Adding 15% to agency worker costs surely goes some way to re-address the imbalance between permanent staff and agency staff?

[sasguru]

Does the stupidity of this government know no limits?
Don't bother answering, that was a rhetorical question.

[DimPrawn]

This is going to have massive implications. Suddenly every temp worker is 15% more expensive, just as the economy falls of a cliff.

Double Doomed.

[BrilloPad]

Perhaps the whingers should hire these people as staff rather than through an agency?

There are huge advantages in having a flexible workforce. Not that it stops the government treating us like tax evading glorified typists.

[Platypus]

Perhaps the whingers should hire these people as staff rather than through an agency?

[swamp]

25,000 temp jobs in danger as VAT loophole is closed
Jonathan Prynn
26.02.09

An estimated 25,000 London temp jobs will be scrapped within months because of a new "tax on work", employers have warned.

The impact could be so severe that City office temps, already being drastically cut back, will virtually cease to exist by the spring.

But public bodies that are highly dependent on contract workers, including charities and hospitals, will also face crippling increases in costs.

The proposed change means that from 1 April, all employers will have to pay 15 per cent VAT on the entire cost of hiring temps, including their pay.

Currently VAT is only liable on the temp agency fee, but the Government says the loophole breaks British and European law and has to end.

Recruitment agencies calculate that the extra VAT will pile £400 million on to temp wage bills and will only serve to accelerate unemployment.

Across London hundreds of thousands of workers, of which around 60 per cent are women, rely on short-term temp contracts that were already starting to dry up.

Paul Venables, finance director of recruitment agency Hays, told the Evening Standard: "We believe 25,000 temporary jobs across London are at serious risk over the next two months as a direct result of this planned change to VAT. This is a tax on jobs. It could not come at a worse time for the economy."

Across Britain as a whole up to 150,000 jobs will be at risk, he said.

The impact will be felt in sectors that cannot reclaim the VAT, including the financial services industry, charities and the health service.

The so called "staff hire concession", which exempted temps' pay from VAT, was introduced in 1997 but has long been under threat. The decision to scrap it was announced by Chancellor Alistair Darling in last year's Budget.

City banks said the extra VAT burden meant temps would simply be seen as too expensive. One senior investment bank executive said: "This really is a big deal. Even before this came in the first people out of the door were the temps."

Keith Hickey, chief executive of the Charity Finance Directors Group, said: "We know of one household name charity that will be hit for £1.6 million. From a sample we have done the average increase in VAT will be £250,000 per charity." In a letter to The Times, the heads of eight major employer groups worst affected by the change said: "The biggest loser out of all this will of course be the Treasury itself, at a time when it needs more than ever to balance its books.

"Any expected increase in VAT revenue from the removal of the staff hire concession will be more than offset by a decrease in PAYE income tax and National Insurance contributions."

But a Treasury spokesman said: "As announced in the Budget 2008, the staff hire concession is to be withdrawn from 1 April 2009 as there is no basis in UK or EU law ... business has been aware of and fully engaged in the review, which has lasted over 18 months."


http://www.thisislondon.co.uk/standa...sed/article.do