UK Recruitment Companies Unite To Fight 'Tax On Jobs'

by Robert Lee, Tax-News.com, London

21 January 2009

The UK Recruitment and Employment Federation has underlined the strength of feeling within the recruitment industry against the proposed removal of the VAT staff hire concession, which it describes as “an additional tax on jobs”.

With a letter and editorial in the Financial Times co-signed by eight of its largest members, published today (January 21) the federation is attempting to show the government its "unequivocal opposition" against the removal of the concession on April 1.

"This is the first time since the formation of the REC in 2000 that larger members have demonstrated their commitment to a major campaign we have mounted to ensure that all members are given the best possible opportunities to get through the economic downturn without additional burdens from government," the REF said in a statement.

The letter stresses the implications the withdrawal of the concession will have on the supply of temporary staff to key sectors such as financial services, healthcare, education and charities with the additional VAT chargeable from April 1 estimated at GBP390m.

“We are calling on the government to delay the withdrawal of this concession until 2011 at the earliest,” the letter states. “By this time, the economy should be recovering and the impact mitigated. This is a real test of the government’s commitment to helping workers and businesses at this difficult time,” it concludes.

The REC’s Chief Executive Kevin Green added: “With this tax change, the government is giving with one hand and taking with the other. Last week’s jobs summit promised to get more people back in work but if the VAT costs on temporary care workers, lecturers and financial analysts soar in April, job cuts will have to be made.”

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