Content
After U, Gordon?
Ups And Downs
Gift Horse
What A Relief!
Second Thoughts?
Last One Out...
Penalty Shoot-Out
Ain't Necessarily So
Going, Going, Gone
Papers In Order?
Death And Taxes
Passing The Buck
Hire Higher
Back Taxes, Taxes Back
Options Open
Extortion?
Sick Note
Cats And Dogs
Old-Fashioned Money
I Thee Endow?
Mother's Rights
Countdown
Nowhere To Hide
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If you use temporary staff, you are probably used to paying VAT only on the agency's charge for supplying them - not on the wages of the staff themselves. You might pay £200, of which £150 goes to the worker, and the VAT is only charged on the £50 that the agency keeps. The trouble is that this is only a concessionary treatment which Customs have allowed in order to be fair to different types of employment business. In the 1990s, a case showed that agencies which used self-employed workers could just charge VAT on their commission, and the concession was introduced so that employment businesses which employed their staff could do the same. Now HMRC say that there is no longer a need for the concession, and we aren't allowed to have it under European law. Department of Trade regulations means that all temporary workers have to be supplied in the same way, so one type of arrangement wouldn't have a VAT advantage over another - so they are giving everyone the VAT disadvantage. From 1 April 2009, VAT will have to be charged on the gross amount paid by users of temporary staff - in the example above, £200 rather than £50. This is clearly a big change and if you use or supply temporary staff, you need to be thinking in advance what it will mean to you. At least we have been given a year to prepare for it.  |
© Bayar Hughes & Co., 2010.