A recent Court of Appeal ruling in the case of ‘Adecco & others vs HMRC’ that employers are required to pay VAT on the wages of temporary staff could cost the charity sector in the region of £20 million per year.
The ruling that VAT is due on the total amount employment agencies charge for temporary staff, rather than just their agency fees alone, prompts uncertainty around future costs. The rationale behind this specific ruling was that the temporary staff were provided by Adecco as principal, not as agent.
This has now resulted in an ambiguous state of affairs, and potentially a large VAT drawback when it comes to flexible employment for charities.
The Court’s decision could negatively impact charities, particularly those that use temporary staff for non-business or exempt purposes, as the additional VAT would be irrecoverable and result in an absolute cost. The repercussions have the potential to infiltrate even further, altering comparable agency arrangements for transport, training, online services other provisions based on the agent / principal model.
It may be beneficial to review existing contracts of this nature, with a view to restructuring to mitigate additional VAT costs.
In the Court ruling of ‘Adecco & others vs HMRC’, the following facts were taken into account:
The Statutory Sick Pay Rebate Scheme closes on 30 September 2021.
The temporary 5% reduced rate of VAT to certain supplies relating to hospitality, hotel and holiday accommodation and admission to specific attractions applies until 30 September 2021.
Opportunity for young adults to access their Child Trust Funds as they turn eighteen.
This year we are delighted to have five new trainees across our Accounts, Audit and Tax teams.
The Government have announced plans to introduce a new UK-wide 1.25% Health and Social Care Levy (the Levy) based on National Insurance Contributions (NICs) for both employees and employers.
After supporting a total of 11.6million jobs through its furlough scheme for at least part of its duration, the Coronavirus Job Retention Scheme is due to close on 30 September 2021.