Praise for VAT reverse delay
10th September 2019
The Government’s decision to put back the implementation of domestic reverse charge VAT for construction companies by a year has been praised by the FMB as ‘a victory for common sense’.
Reverse charge VAT was due to come into force from 1st October 2019 but the Government has now decided to delay implementation until 1st October 2020 after a coalition of construction organisations, led by the FMB, wrote to the Government to point out the damaging impact this badly-timed policy would have on the sector.
Brian Berry, Chief Executive of the FMB, said: “To plough on with the October 2019 implementation could have been disastrous given that the changes were due to be made just before the UK is expected to leave the EU, quite possibly on ‘no-deal’ terms.”
He continued: “The situation hasn’t been helped by the poor communication and guidance produced by HMRC. Despite the best efforts of construction trade associations to communicate the changes to their members, it’s concerning that so few employers have even heard of reverse charge VAT. Indeed, according to research by the FMB published in July, more than two-thirds had not heard of the VAT changes and of those who had, around the same number hadn’t prepared.
“It is reassuring that the Government has listened to the construction industry, which has come together to make clear to the Government that sticking to the October 2019 timetable could lead to a loss of productivity, reduced cashflow and in the worst cases, lead to a hit on jobs, tipping some companies over the edge.
“What’s required now is for the Government and industry to work together to deliver a sector-wide communications campaign, which must include plain English guidance on the changes. We also want to work with the Government to deliver workshops aimed at construction employers, held in locations across the country, to explain what’s happening and why.”