The UK chancellor, Philip Hammond, is to close a tax avoidance scheme used by temp recruitment agencies. The “contrived” scheme, which is estimated to cost taxpayers “hundreds of millions” of pounds each year, creates savings through multiple claims of the employment allowance and via the flat-rate VAT scheme. HMRC is believed to have received hundreds applications to join the scheme in excess of expectations this year, the majority of which were from “unscrupulous agencies”. The government will now introduce a 16.5% rate for businesses with limited costs, including labour-only businesses, from 1 April 2017.
The UK chancellor, Philip Hammond, is to close a tax avoidance scheme used by temp recruitment agencies. The “contrived” scheme, which is estimated to cost taxpayers “hundreds of millions” of pounds each year, creates savings through multiple claims of the employment allowance and via the flat-rate VAT scheme. HMRC is believed to have received 30,000 applications to join the scheme in excess of expectations this year, the majority of which were from “unscrupulous agencies”. The government will now introduce a 16.5% rate for businesses with limited costs, including labour-only businesses, from 1 April 2017.