Statistics gathered from over 2000 mailings to recruitment companies just days in advance of the 6th April deadline for the introduction of the Control of Employment Agencies and Employment Business Regulations have revealed a worrying lack of awareness of the VAT consequences of Regulation 8
Most startling was that less than 20% of the respondents were aware of any changes at all, even though over 20% were trading as Agencies supplying and paying temps: the very thing which is prohibited by the regulations!
Of those affected, less than 5% had sourced a solution which would allow them to continue to charge VAT on the margin only to their non VAT registered clients, after 6th April. Those were mostly suppliers to the financial services sectors who had VAT mitigation solutions in place with VAT registered contractors or ìUmbrellaî companies etc before the introduction of the new Regulations.
Around 10% of those affected believed that their ìAccountants would deal the matterî but had no clear knowledge of their own status as an ìAgencyî or a ìBusinessî!
Only 0.01% (literally two companies) were able to confirm that as a result of the new regulations, they had sought and were putting in place a solution that allowed compliance with the Customs and Excise Staff Hire Concession.î
ìHead in the sandî attitudes seem to prevail, for more worryingly perhaps, is that recent follow up telephone calls revealed many Agencies now have an awareness of the changes but are simply ignoring Regulation 8. Our thoughts are that many Employment Agencies will not consider changing to Employment Businesses and utilizing the Staff Hire Concession until Customs and Excise has won at least one well publicized case against an Agency placing and paying temporary workers but failing to charge VAT on the wage element of their invoices.
Click cashsimply.com for information on the Customs and Excise ìStaff Hire Concessionî .
Recent regulation changes could result in costly VAT headaches for Agencies.
Lack of awareness could be costly
