The Recruitment and Employment Confederation (REC) has called on the government to shelve plans to add extra taxation to the provision of temporary workers in sectors such as healthcare, social work and education.
The HM Revenue and Customs (HMRC) consultation on the review of the current VAT concessions for the supply of temps has ended and officials will be reflecting on responses from a wide-range of representative bodies.
Currently, many employment agencies act either as agents for VAT purposes or are able to use the staff hire concession. In either case, agencies are only required to charge VAT on their commission, or on an amount excluding salary and other associated costs.
The REC has been engaged in discussion with HMRC for several years and is continuing to seek a favourable outcome for both employers and jobseekers.
Tom Hadley, the REC's director of external relations, said: "The extra taxation would make recruitment costs prohibitive for employers and would limit the opportunities and flexibility that temporary work provides for thousands of workers in the UK.
"It is crucial that the government takes on board the submissions from business organisations such as the REC and does not underestimate the effect that withdrawing current concessions would have on the national labour market."