Government agrees to delay VAT change “chaos”

Grant Prior 3 months ago
Share

The government has agreed a one-year delay to VAT changes threatening a cash-flow crisis across construction.

More than 150,000 construction companies were facing a 20% drop in cash flow when planned VAT changes came into force next month.

But now HMRC has agreed to delay implementation of the “domestic reverse charge” until October 1 2020.

The postponement follows a lobbying campaign from all sides of the industry warning the charge would cause chaos across construction.

HMRC said it remains committed to introducing the change but conceded businesses need “more time to prepare.”

It added: “This will also avoid the changes coinciding with Brexit.”

The domestic reverse charge changes mean companies in the construction supply chain will no longer receive their 20% VAT payment when they submit bills.

The VAT cash will instead be paid direct to HMRC by the customer receiving the service who will reclaim it in the normal way.

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.”

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.”

Latest news

Contractors rally to help Clugston staff facing the axe

Trade body calls up firms to offer laid off staff jobs in run up to Christmas
6 hours ago

Clugston files for administration

Hundreds of jobs at risk as financial crisis hits regional contractor
19 hours ago

London Resort reveals next generation theme park designs

Developer hopes to start construction in 2021
10 hours ago

Historic Liverpool building refurb now on third fit-out firm

Overbury brought in to replace Caddick who took job from Styles & Wood
11 hours ago

Green light for Birmingham’s tallest resi tower

Construction go-ahead for 51-storey skyscraper
11 hours ago

McLaren and Sisk hire regional directors from Kier

Andy Langley and Bruce Clarke take up key roles
11 hours ago

Oxford Science Park expansion approved

Major office and laboratory complex is set to be built in Oxford next autumn
11 hours ago

Giant property fund suspends dealing

Outflow of cash prompts move as investors flee sector
1 day ago

Mace takes jump factory system to next level

Contractor launches Mace Tech business to transform high rise flats building
1 day ago

Winvic to build £57m Cardiff PRS tower

Winner confirmed for build to rent scheme as Grainger agrees funding deal
1 day ago

Creagh Concrete targets £200m turnover

Expanding concrete specialist looks to grow workforce to 1,000
1 day ago

Council fined £1.4m after falling bollard injures girl

Court hears how failings at council's highways deprtment left a six-year old with brain injuries
1 day ago

Consultation opens on ring-fencing retentions in Scotland

Specialist contractors call for action to protect retention payments
1 day ago

Vital Energi lands £7m M&E package from Berkeley Homes

Latest win for specialist at Royal Arsenal Riverside development
1 day ago

Willmott Dixon wins £39m university refurb job

London South Bank University awards contract for new learning hub
1 day ago

Edinburgh private rental scheme approved

Moda Living gets all clear on 139-flat Springside scheme
1 day ago

Plan for £100m landmark Portsmouth University project

13-storey academic building will rise to
2 days ago

Go-ahead for £500m Thames riverside fire station scheme

Developer U+I to start construction on major mixed use site in 2021
2 days ago

Just days left for deal to keep Midlands hospital restart on track

Government red tape over funding improvement targets holds up deal
2 days ago

Amey utilities and waste business up for sale

For sale sign hoisted over loss-making divisions employing around 6,000 staff
2 days ago

Skanska chalks up £23m Bristol secondary school job

Contractor has strong track record of school projects in the city
2 days ago

Nod for 350 flats plan at old Leicester City ground

Mix of rental and for sale flats to be built at former Foxes homes
3 days ago

Buyers report construction still in “contraction hole”

Speed of decline falls in November but political uncertainty casts shadow over industry
3 days ago

Boost your online presence – join the Enquirer Directory

Site for suppliers and buyers showcases products, services and latest stories
2 years ago

Heavy rain hits another major civils job

Galliford Try's £120m Lincoln Eastern Bypass turns into a quagmire
3 days ago

Sky plans major film studio complex at Elstree

Legal & General will develop and part-finance the 32-acre site in Hertfordshire
3 days ago

Chancellor pledges review of freelance tax changes

Review of planned IR35 changes could spare construction widespread disruption
3 days ago

ISG on board for £89m Cardiff bus interchange

Mixed use scheme is contractor's biggest win of the year
3 days ago

Atkins online plea to SMEs to help fix potholes

Consultant aims to reach more small firms by bypassing traditional procurement route
3 days ago

Plan for new 8,000-seat Edinburgh indoor arena

Arena scheme to include conference, retail, leisure and hotels
4 days ago

Contractor services