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Acorn calls for VAT concession rethink
One of the UK's leading recruitment and training specialists Acorn is calling on the Government to rethink its plan to remove a VAT concession that could reduce job opportunities.
The Acorn Group, which finds work for up to 5,500 people each week across the UK, warns that job security for temporary workers could be seriously affected by the new legislation.
Currently, businesses in the financial services, healthcare, education and charitable sectors that are unable to reclaim VAT receive a concession from HM Revenue & Customs when they hire temporary agency staff.
But that concession is due to be withdrawn on April 1 – a move that Acorn believes will prove costly.
Andrew Scott, Acorn’s finance director, said: “We question why, particularly at this time, VAT should be added to temporary workers’ salaries and associated national insurance costs – rather than just on the agency fee, as is currently the case.
“This amounts to an additional tax on jobs at a time when many organisations will be fighting against the deepest recession for almost 20 years.”
The current arrangements mean that those businesses and organisations that cannot reclaim VAT are charged VAT only on the ‘service’ or ‘management’ element of the overall fee by a recruitment agency for providing temporary staff. The proposed arrangements to come into force in April will remove the concession and as a result these organisations will have to pay an additional VAT charge for the workers’ salaries and associated NI costs as well as for the agency fee.
Acorn argues that this will bite into already decreasing budgets for staffing, thereby reducing the number of workers that employers will be able to take on.
Mr Scott added: “Business in Wales will be forced to cut back on the number of positions they offer because of the additional cost, thereby adding to already increasing levels of unemployment.
“We are calling on the government to delay the withdrawal of this concession, until 2011 at the earliest in the hope that by this time the economy should be recovering and the impact felt far less.
“This is a real test of the government’s commitment to helping workers and businesses at this particularly difficult time.”
Established in 1992, Acorn has 32 branches across South Wales, North Wales, the West Country, Scotland and the North West of England.
Acorn places up to 5,500 people into about 750 different client companies each week. The business delivers training to more than 3,000 individuals and makes 1,500 permanent placements every year.
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