The Association of Recruitment Consultancies (ARC) has issued an update on its meeting on 12th January with senior Government officials to discuss the Apprenticeship Levy.

ARC lawyers were instructed in November to put questions to the Government about the disproportionate effect that the levy would have on employment intermediaries such as recruitment companies, whose payrolls technically include large numbers of people who are not in-house employees but are instead supplied by the intermediaries to work for end-clients.

Umbrella Companies supplying contracting professionals to end-clients are similarly affected.

In December, key Revenue officials tasked with delivering the levy agreed to hear the concerns of ARC representatives. ARC Chair Adrian Marlowe has now confirmed that on 12th January, he and his team met with these senior Government representatives (two HM Treasury officers, the lead officer for HMRC and the lead officer responsible for ensuring that the levy is fit for purpose for its launch date in April).

Mr Marlowe and his colleagues highlighted a glaring anomaly with the levy: it is currently applicable to the payroll of supplied agency workers, thereby creating a disproportionate effect on employment intermediaries, although other sectors are also affected.

New proposals devised with ARC members were put to the Government representatives, who appeared keen to ensure that the levy could be rolled out on schedule without unforeseen glitches.

Mr Marlowe said: “This plan, if accepted, would not only allow agencies the benefit of the allowance on their own internal staff payroll entirely independently of the agency worker payroll, but would result in a uniform levy that could be charged on to the hiring client transparently, where the agency feels it appropriate to do so.”

He went on to explain that the ARC’s innovative proposal would meet all of the Government’s objectives as set out in its original consultation while protecting agencies from being disproportionately affected as a consequence of their artificially high payrolls.

The Government levy lead has since described the meeting as “helpful,” Mr Marlowe added, and has confirmed that the proposal will now be reviewed in detail with the relevant departments.

The ARC plan clearly has applicability to other intermediaries with artificially high payrolls such as Umbrella Companies.

Conceding that the Government has left itself little scope for early change in its levy policy, Mr Marlowe said that the ARC is eager to see its plan being adopted as soon as possible. The current arrangements, he said, would prevent hirers from using the agency worker levy funds to which they may have contributed.

The levy will be the subject of a conference hosted by the ARC in London on 9th February, details of which can be obtained from its website.

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