A move by the Treasury to withdraw tax concessions for temporary workers in the City of London has been met with predictable and, it must be said, quite justified, howls of outrage.
The Treasury are intending to charge VAT on the wages of temporary staff, which inevitably will cause problems with those businesses that cannot reclaim VAT.
Banking, healthcare, finance and education are among those businesses who would be worst affected.
Inevitably, if businesses are paying out an extra 17.5% they can't reclaim, they will reduce staffing levels. The Treasury doesn't seem particularly concerned by this and the proposed move will become law in April 2009.
I suspect that it will result in redundancies, particularly in the currently-wobbly finance and banking sectors.
