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Budget 2008 - Impact on the Recruitment Sector
Relevant points of note
On March 12th the Chancellor of the Exchequer, Alistair Darling,
delivered his first budget amid a potential economic downturn, 'credit
crunch' and recent Northern Rock crisis.
A more general overview is available from our accountants on the previous news
link, Budget Overview 2008, however we
are now able to highlight the areas which effect our industry, in more detail,
thanks to Haley Morbin of APSCo
As expected, there were reforms announced to close perceived
tax 'loopholes', to simplify the taxation system, to increase spending on skills,
and better management of large scale public sector IT programmes.
Of most relevance to Inspired Recruitment, and those using our service, in terms
of taxation reforms is Chapter 4, entitled Fairness and Opportunity for All and the detailed documents from HMRC.
The key points from Chapter 4 to note are:
- Para 4.54 "The staff hire concession, which currently allows employment
businesses to charge VAT solely on the margin of their supplies, will be withdrawn
by HMRC with effect from 1 April 2009." Technical note on this
and the impact assessment.
- Para. 4.70 "The Government is concerned at the growing use of structures,
such as "umbrella companies" or overarching contracts of employment
with employment businesses, to obtain tax relief for travel expenses that
would not be available to other workers. It will monitor the use of these
structures and, if necessary, consider action in the future."
- Update from HMRC on improving tax anti avoidance measures,
available here.
- The publication of consultation document entitled: "Improving collection
of National Insurance Contributions from the self-employed", available here.
- A review of HMRC's powers, deterrents and safeguards, including a modernised
approach to compliance checks and assessing errors across income tax, CGT,
corporation tax, PAYE, VAT and NICs, and changes to make it 'easier' for taxpayers
to pay what they owe on time.
- Future consultations on improving tax administration, including aligning
penalties for the late filing of tax returns, and simplifying the rules paid
late and on repayments of overpaid tax.
- Chapter 3 of the Budget, entitled 'Sustainable growth and prosperity', available here, laid out the Government's plans for increase in spending on skills including detail on the £60 million further investment over the next 5 years,
additional apprenticeships. In terms of improving engineering and technology
skills, the budget states:
- Para 3.27 "Good progress is being made in the implementation the Sainsbury
Review recommendations. The Technology Strategy Board (TSB) is delivering
on its leadership role and will shortly publish its strategy, including joint
initiatives with the Regional Development Agencies and Research Councils and
programmes to support innovation across a wider range of sectors. The Department
for Innovation, Universities and Skills (DIUS) will pilot a reformed Small
Business Research Initiative (SBRI) with the Ministry of Defence, Department
of Health and other selected partners, prior to wider roll-out in 2009. DIUS
and the Department for Children, Schools and Families (DCSF) are delivering
a new campaign on Science, Technology, Engineering and Mathematics (STEM)
skills, including a new £6 million communications campaign, working
towards better careers guidance for pupils, and planning for a National Science
Competition from 2008-09."
- Chapter 5, entitled 'Stronger Communities and Effective Public Services'
announces the publication of the Public Value Programme, which will specifically
look at the way in which "major public sector IT projects are run and
accounted for".
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