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Danny Alexander, the Treasury’s Chief Secretary, launched a crackdown on tax avoidance in the recruitment industry as some staffing firms avoid paying taxes, such as income tax and national insurance (NIC) for UK workers.
The Treasury is targeting offshore intermediaries used by some local recruiters to hire UK workers. Mr Alexander said: “The rule is simple: if you employ people in the UK, you need to pay tax and national insurance in the UK. We will make sure you do.”
The Government announced several measures to tackle tax avoidance, including the creation of an income tax and NIC charge levied on the offshore intermediaries of those workers engaged in the UK.
The Recruitment and Employment Confederation welcomed the news. REC Chief Executive Kevin Green said: “We continue to demand clarity and consistency from HMRC and the Treasury to ensure that businesses in our sector operate on a level playing field.
“It is important to recognise that one of the key driving forces behind the growth of tax avoidance schemes is the relentless focus on cost above all else by clients in both the public and private sectors. Whilst we understand the need for employers to seek value for money, workers and agencies are finding that the only way to increase their take home pay and preserve any sort of profit margin is through recourse to these sorts of schemes. We are keen for the clients of our members to audit their supply chains and avoid encouraging this type of ‘race to the bottom’ behaviour.”