Government agrees to delay VAT change “chaos”

Grant Prior 5 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

Key Grenfell witnesses claim immunity from prosecution

Staff and ex-staff from Rydon and Harley Facades seek “privilege against self-incrimination”
1 hour ago

Subcontractors wanted across Birmingham

Work up for grabs at latest Constructionline Meet the Buyer event: Register now
3 hours ago

Groundworks firm UKD falls into administration

Civils specialist had a £28m turnover
9 hours ago

Emails reveal key Grenfell firms knew cladding would fail in blaze

Grenfell Inquiry told bid documents specified zinc cladding not ACM before value engineering
22 hours ago

Multiplex sued for £73m over Glasgow super hospital faults

NHS Trust starts legal action after independent review into problems at Glasgow hospital
1 day ago

£6.8bn Lower Thames Crossing tunnel extended

Plan to submit for development consent order slips six months after design overhaul
8 hours ago

Industry in uproar as plant skills card chaos continues

Operators, trainers and contractors fuming over months of CPCS renewal problems
9 hours ago

£180m Cardiff cancer centre bid race to start in May

First hospital to be procured under Welsh Government's Mutual Investment Model
9 hours ago

Clugston administrators sell haulage business

Over 150 jobs protected at Clugston Distribution Services
1 day ago

Kier bags £21m Bradford Markets project

City centre regeneration project to start in late Spring
9 hours ago

Crest Nicholson blames profit wobble on offsite focus

House builder aims to cut construction and specification costs
1 day ago

Grenfell Tower firms accused of merry-go-round of buck passing

Harley Facades calls for inquiry cladding expert to highlight widespread acceptance of design
1 day ago

£500m funding to bring back historic rail lines

Government to release funds to drive forward reversal of Beeching era cuts.
1 day ago

Civils chiefs raise alarm over rampant insurance cost hikes

Contractors facing huge bills as insurance market hardens
2 days ago

Wates Property Services targets £500m sales by 2024

Ambitious growth plans for new business unit formed from Wates FM and Wates Living Space
1 day ago

£500m heating and renewal framework winners

Eighty-two firms secure places on panel for public sector decarbonising
2 days ago

North West framework winners for jobs up to £3m

Low-value project framework is worth up to £120m
2 days ago

Higgins combines construction and housing divisions

Move to ensure company "has the right foundations for the future"
2 days ago

Grenfell Inquiry reopens today with contractors statements

New Inquiry panel engineer resigns over conflict of interest concerns
2 days ago

Canary Wharf Group to submit plans for next high rises

Plans to be lodged in March for 8 new buildings at North Quay site
2 days ago

Administration again for ironmongery firm Laidlaw

140-year-old supplier sunk by project delays
2 days ago

Kier Utilities seals first Openreach deal

Utilities arm wins Hampshire and Berkshire upgrade through Openreach Network Services framework
2 days ago

Site tool thief caught by blood stain

Power tool raid on Kent site lands thief with 29 months prison sentence
2 days ago

Race starts for £570m Birmingham HS2 station

HS2 opts for a two-stage bid process for landmark Birmingham station
5 days ago

Boost your online presence – join the Enquirer Directory

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

Stepnell streamlines to meet “challenges ahead”

Another regional boss exits as contractor restructures
5 days ago

HS2 must start by March to avoid serious cost rises

NAO report reveals reducing risk on contractors has saved £1bn
5 days ago

Midas hires ex-McLaren regional boss

Steve Hart heads up Midas Group residential arm
5 days ago

Asbestos hotel lands contractor in court

HSE inspectors swoop on refurb site
5 days ago

Wates giving ex-offenders a chance on site

Prison programme helps solve site skills crisis
5 days ago

Contractor services