Reverse charge VAT, which will make contractors responsible for handling VAT, was due to be implemented on 1 October 2019. However, the Government has listened to industry recommendations and agreed to delay the implementation of reverse charge VAT until 1 October 2020. Below are
National Federation of Builders
The National Federation of Builders (NFB), which partnered a coalition of fifteen construction organisations to recommend a six month delay, welcomes the Government’s decision and hopes to work with them on making sure the industry is ready in 2020.
Richard Beresford, Chief Executive of the NFB, said: “Contractors and sub-contractors weren’t ready for reverse charge VAT and we are delighted that the Government has listened to our industry campaign to seek a delay.
“The Government has given us double the time we recommended and this will help us work together to set up improved online guidance, hold workshops and make sure the entire industry understands what reverse vat charge means for their business.”
The federation is holding a series of Regional Construction Forums around the country in October and November 2019. Leading construction tax expert Liz Bridge will be offering practical advice on how to deal with reverse charge VAT.
Federation of Master Builders
The Government’s decision to delay by one year the implementation of potentially damaging VAT changes for construction companies is a victory for common sense, says the Federation of Master Builders (FMB).
Brian Berry, Chief Executive of the FMB, said: “I’m pleased that the Government has made this sensible and pragmatic decision to delay reverse charge VAT until a time when it will have less of a negative impact on the tens of thousands of construction companies across the UK. 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. 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.”
Berry concluded: “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.”