Tax experts see devil in detail

AS with most recent Budgets, tax experts said the devil was in the detail of Mr Darling's announcements.

David Heaton, head of employer consulting at Baker Tilly in Leeds, highlighted a measure that will affect businesses in the finance sector as well as those in healthcare, education, charities and some parts of the public sector.

“They are going to find the use of employment agency workers more expensive due to a VAT change from April 2009,” he said.

“Some agencies only charge VAT at the moment on the margin they make on supplying workers. This treatment is being withdrawn so full VAT will be chargeable on the cost of supplying the worker.

“It's going to hit hard those businesses that can't recover their VAT. It seems to be part of a concerted effort by Her Majesty's Revenue & Customs (HMRC) to clamp down on the use of agency workers where abuse of the tax system has been seen over the last couple of years,” commented Mr Heaton.

The Chancellor announced the development of a new duty to replace the existing Air Passenger Duty.

However details of the new duty are restricted by the fact that it is “a new tax and not currently a function of HMRC” according to the HMRC website.

“This seems a nonsense to include something about which there is no information so people cannot judge the impact of it on business or the environment,” commented Jackie Yarrow, tax manager at Baker Tilly, Leeds.