ARC seeks review of regulations and VAT concession

The Budget, as we now know, has set the economy on a determined course of austerity. The public sector is singled out for substantial reductions, while there is a focus on the private sector which is seen by the Chancellor as the best way to stimulate growth.

“The combination of these factors offers substantial opportunities for recruitment consultancies, that adopt the right strategic approach, to help the recovery” says Adrian Marlowe, Chairman of the Association of Recruitment Consultancies (ARC). “Understanding the long term objectives of their clients will be as important as ever and a willingness to facilitate those objectives, in the manner that only recruitment consultancies can provide, will be crucial as employers struggle to maintain their services and products.”

The ARC argues that the role that recruitment consultancies have to play in terms of both permanent placements and temporary supply could well be key, and deserves maximum promotion and government support. Adrian Marlowe continued “While promotion can be undertaken by recruitment consultancies themselves, the platform from which they launch their services should be as stable as possible, allowing for easy delivery rather than hindering them in a way which can only make them less attractive, and this is a point for government.”

“We therefore welcome the indication by the government of its proposal to review IR35, which has a direct bearing on the cost of supplying contractor services. However, more importantly, we also call upon the Government to review the Agency Workers Regulations (AWR) to remove the anomalies that create unnecessary liabilities, confusion and costs, and to announce a policy decision to do so at the earliest opportunity. Such an announcement could help remove current concerns that hirers have over using agency workers, and would provide positive encouragement to use the full range of services that recruitment consultancies have to offer.”

“Modifying the Regulations is perfectly feasible. With the cost of the AWR estimated at £40bn over the next 10 years by the Conservatives, amendment is an option the UK cannot afford to ignore.”

These are not the only areas though. The ARC also urges the Government to consider reinstatement of the VAT staff hire concession that was withdrawn last year. The concession, which was particularly helpful to public sector and other organisations that could not recover VAT, allowed the supply of staff free of VAT on certain conditions.

Adrian Marlowe commented “ Reinstatement would put the attraction of using flexible agency staff on a more equal footing with regular employees, and many organisations do like to try someone as a temp before hiring permanently. This would cut the costs of hiring agency staff by the tune of 20 per cent from the end of this year, thereby easing the strain on non VAT registered organisations including public sector, and at the same time would be in tune with the coalition’s desire to encourage new start businesses.”