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

baileysbattlebus

I used to work for a government agency as a temp for a couple of years - and I don't think they can reclaim vat.

The way it worked with a couple of the big employment agencies was that their was no uplift in the hourly rate, which is what normally happens, temp earns £10 per hour, agency charges £15 per hour, instead they charged a "management fee" and vat was paid on that and not the temp's pay.

It will make a big difference to them and perhaps education and health, apart from charities.

Contractors will have to put their fees up or take a pay cut. Oh dear.

And I know from working in the agency for some of the contractors it was nearly like a licence to print money.

JasonLVC

Its not a 'loop-hole', it was a concession by the Government to level the playing the field between agencies that supply staff into business (like office angels) and other agencies that had self employed people on their books who the agency then 'placed' into temporary roles - one was VATable the other wasn't - so was unfair for one type of agency.

However, following changes in law in relation to the status of temporary workers all agencies are now seen as a principal supplier of staff and so the disparity that once existed no longer does and so the concession is no longer needed. Basically, temp workers now have the same rights as permanent workers (annual leave, sick pay, etc).

It makes sense to us VAT people!.

It couldn't come at a worse time though for this sector. The hardest hit will be sectors which cannot recover VAT - so most bank/insurance companies, most charities who provide care, care homes and such like. Even for a normal business which can recover VAt, the increase in cost of hiring a temp staff member will affect cashflow (albeit temporarily) and in this climate, every penny in the bank account counts!.

drc

bubblesmoney wrote: »

.... wonder why they havent started taxing the dead yet.

They do, it's called inheritance tax :mad:

lynzpower

PasturesNew wrote: »

Charities do have high pay. They rely on a lot of volunteers, but those in paid employment with them are quite often highly paid.

I think the trouble with charities is there are too many of them. If you could actually get help from a charity you never would because you'd never know they existed.

A lot seem to overlap and rent expensive buildings.

Many charities get thier buildings rent free, as the rent is provided by local authorities so that the charity can afford to function in their area. Many charities now are given free space to avoid the owner of the buildings getting lumbvered with huge vacant buildings tax bills.

I think in some ways there are too many, but in other ways not enough. FOr those of us who have worked with charities ( such as ruggedtoast and I) know they do a vital job.

I think its absolute claptrap top say no one benefits.

How many people here benefit from phoning Shelter or Crisis?
How many people have been supported by the CAB?
How many people have had family support from the likes of NSPCC, Barnados, Action for children, Macmillan Cancer, YMCA etc etc.
We would have people dying on the streets if it wernet for charities. I used to work for an arm of one of the larger charities working with young women under 18 abused through prostitution & pornography in london. Dont tell me that organisation didnt help, because it certainly did.

Its absolute rubbish to suggest that all charities are pointless. UNtil you have a need that is met by a charity, youll never know.

JasonLVC

I deal with many charities, both large national and loca lones and I cannot say that they all get their expensive buildings rent free.

Local councils may want to fill the black holes in the high street with charity shops (and there are concessions here in terms of rent and business rates) but many charities do operate as a comemrcial enterprise....and that means paying commercial salaries to retain the best people for the job.

ruggedtoast

When I give money to a charity I expect that a %age of that will go towards paying the staff who work in the charity. I would hope they do a decent job and I dont believe living in penury supports that.

Whatever charity workers make, ime a fair chunk less than the private sector, its a lot less than the people working at one of Clown's blasted failed banks that we have to donate to get.

I know if I had a choice to donate to RBS and was forced to donate to Save The Children I'd be a lot less p'd off than with the current arrangement.

chewmylegoff

this is an interesting move, given that the biggest employer of temporary staff in the country is the government.

the government is therefore raising its temp staff bill by 17.5% because it cannot claim the tax back, and then recovering it from the temp agency through the tax system.

well done!

lynzpower

chewmylegoff wrote: »

this is an interesting move, given that the biggest employer of temporary staff in the country is the government.

the government is therefore raising its temp staff bill by 17.5% because it cannot claim the tax back, and then recovering it from the temp agency through the tax system.

well done!

Completely agree.

ONly a matter of time till my OH gets chopped back ( he temps for central gov atm)

When I was a social worker almost half the team were on temp contracts

chewmylegoff

possibly the way forward is to recruit temp staff wihtout using an agency.

even if they technically had to charge you VAT, most would be under the £50-odd-thousand threshold for registration.

cut out the theiving middleman.

lynzpower

Totally agree!Both me & OH have used agencies for working with the State, he has worked in a number of C gov depts, I have worked in Local but also a couple of quangos. I dont see why Brown cant do a bit of job creation and open a job shop/ agency in one of thier GF offices ( we know there is loads vacant) and start creating an agency like that.

The amount we as taxpayers have lost threough agency work is crazy. I worked as an Team assistant ( secretary accounts etc) and had to pay the invoices. my agency was getting 26.40 and I got 6.40 an hour.

What a waste of money :mad: