The National Federation of Builders (NFB) has written to Sajid Javid MP to ask for the 1 October 2019 introduction of domestic reverse charge VAT to be delayed until April 2020
Reverse charge VAT means that the customer receiving the service will have to pay the VAT to HMRC instead of paying the supplier. The reverse charge applies through the supply chain where payments are required to be reported through the Construction Industry Scheme.
The NFB, in collaboration with other trade federations, has highlighted the impact the change will have on cash flow and administration costs for an industry already facing increased material and labour costs.
The NFB says the guidance issued by HMRC was delivered late, is not clear and leaves some questions unanswered. A delay before introducing the reverse charge VAT would give the industry and government time to properly prepare the industry to understand the changes and update systems.
Richard Beresford, chief executive of the NFB said: “For an industry facing lighter workloads, increasing pressure on cash flow and an already high rate of insolvency, reverse charge VAT could not have come at a worse time.
“By delaying the introduction of this measure, the industry will have more time to properly prepare and make their businesses more resilient, and more detailed guidance can be provided to ensure a smooth introduction.”
