There's still time to make your views known on the possibility of VAT being imposed on the bill for of temporary staff.

That was the view of Deloitte director Helen Devenney, speaking at a Recruitment Society event last week. Devenney has had dialogue with HM Revenue and Customs on the subject. Although HMRC's consultation period came to an end on 31 August, the general view in the industry is that the complications of the subject mean no decision is likely to be made for several months at least.

Devenney said she would be very surprised "if anything happened too quickly". She said the view that this was a simple matter, initially held by some HMRC officials, was unlikely to prevail. At present, only a recruitment agency's commission is subject to VAT. This follows the landmark case involving Reed Personnel Services in 1995. It found that Reed was acting as an agent for tax purposes. This led to the "Staff Hire Concession" being introduced but this is now under threat.

Rule 8 of the Conduct of Employment Agencies and Employment Business Regulations, introduced in 2003, says an employment agency can no longer both introduce and pay workers. Only an employment business can do this, and the HMRC may take the view that it is acting as a principal not as an agent, meaning VAT should be charged. Devenney said another possibility was VAT could end up being payable, but at less than the standard 17.5% rate. Any change would hurt businesses such as banks and insurance companies, and health services. They cannot recover VAT by passing it on to customers.