Temporary jobs 'at risk' over VAT change

Date: 26th February 2009

Up to 25,000 temporary jobs in London could be at risk due to an upcoming change in VAT, the Evening Standard has reported.

From April 1st, recruitment firms will be obliged to pay 15 per cent VAT on the total cost of hiring temporary staff, rather than just the agency fee.

Finance director for the recruitment agency Hays, Paul Venables, told the Evening Standard: "We believe 25,000 temporary jobs across London are at serious risk over the next two months as a direct result of this planned change to VAT.

"This is a tax on jobs. It could not come at a worse time for the economy."

He added that up to 150,000 temporary positions across the UK would be in danger following the change.

A recent poll by the Federation of Small Businesses found that 97 per cent of firms did not believe the government's temporary 2.5 percentage point VAT cut had been worthwhile.