VAT for temping jobs will be a "burden", says ICAEW

News Article - 03 October 2006
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Full VAT charges on employment costs of companies which employ temporary workers will be an additional "burden", the Institute of Chartered Accountants in England & Wales (ICAEW) has said.

HM Revenue and Customs is to levy VAT on the full employment bills of temporary ICT employees provided by temping companies and not just on the agency commission.

The measure, which was first outlined in June, will affect businesses which employ IT personnel such as banks, insurers and charities, which will now have to pay VAT on their temps' wages as well as the agency's commission.

Accountants at the ICAEW said: "The ending of the concession will result in an additional VAT liability for those currently using it.

"VAT on the remuneration and employment costs will be a considerable extra burden for those partly exempt businesses unable to recover all the tax charged."

The tax faculty at the institute said that workers in the financial and education industries would be hardest hit by the move, which will become "a new tax on employing temporary staff".

Prior to this latest development, HM Revenue and Customs hosted a business advice day in St James' Park, Newcastle, to help entrepreneurs in the region kick-start their businesses by providing financial advice.

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