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

JasonLVC

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!

The government have their own VAT rules (called section 33) and allows them to recover VA even though hey haven't charged it to anyone.

As for the waste of money, I've doen wrk for Councils and they had staff off sick for over two years but rather than 'back to wokr' interviews ust let the staff stay at home whilst hiring very expensive temps - when I brought this to Management's attention they said don't worry about as if they overspend they overspend, simple as that. The shortfall would be made up somehow.....

chewmylegoff

JasonLVC wrote: »

The government have their own VAT rules (called section 33) and allows them to recover VA even though hey haven't charged it to anyone.

As for the waste of money, I've doen wrk for Councils and they had staff off sick for over two years but rather than 'back to wokr' interviews ust let the staff stay at home whilst hiring very expensive temps - when I brought this to Management's attention they said don't worry about as if they overspend they overspend, simple as that. The shortfall would be made up somehow.....

section 33 only applies to councils, and if i recall correctly it is only a partial exemption designed to ensure council tax is not spent on VAT, so councils can only reclaim a percentage of their VAT, as some of their funding is from central government.

anything centrally funded cannot recover VAT.

harryhound

On the original link, someone has suggested working inside your own company.
Leggit if you have at least two customers..
[I had a cousin who did this, but that was because she could not get a work permit]

Arcaine

For the private small company this has no effect on profit, but most Agencies demand payment withing one week or so for the staff, however you would not be able to claim that back until the end of the VAT quarter, this is going to put further pressure on small businesses cashflow who rely on a lot of temporary labour.

chewmylegoff

Arcaine wrote: »

For the private small company this has no effect on profit, but most Agencies demand payment withing one week or so for the staff, however you would not be able to claim that back until the end of the VAT quarter, this is going to put further pressure on small businesses cashflow who rely on a lot of temporary labour.

well you could just go on to monthly VAT accounting, and assuming your monthly costs for temporary staff are fairly constant there would only really be an effect on your cash flow in the first month, as in the next month you'd have the effect of claiming back the VAT from last month to offset the payment of this months.

Arcaine

True, but thats only available to companies below 1.35 million turnover and who make cash sales rather than credit. So it is probably only shops/retail that can really take advantage of this.