Charging VAT on hiring will cost banks £50m

Removing the VAT exemption for staff hire will hit financial services recruitment hard, an organisation warns.

In its report on the proposed changes, the Recruitment and Employment Confederation (REC) claims this change would cost up to £50 million for investment banks.

The organisation states more than 25,000 financial services jobs are sourced through recruitment agencies and insisting firms pay VAT on costs accrued through these channels will hit recruitment agencies, those looking to take on new employees and jobseekers.

REC chief executive Kevin Green claims his organisation is looking to enter discussions on how to reduce the impact of these changes and "avoid the fallout" of the charges.

"The net result of having to add VAT to the overall cost of taking on temporary and contract workers is likely to be less flexibility, higher costs for UK businesses and fewer jobs available," he warns.

REC represents the recruitment industry, which generates £26.6 billion and finds jobs for nearly one and a half million temporary workers.

As a recruitment provider to many of the UK’s major banks, mortgage lenders and building societies Aaron Wallis have a deserved reputation within Financial Services recruitment. Their dedicated FS consultants recruit sales professionals across Retail Banking and Financial Services including IFA’s and Mortgage Broking.

Filed: 03-10-2008