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CIOT and construction trade bodies call for delay in VAT reverse charge

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The CIOT has written to HMRC, asking for introduction of the VAT reverse charge on supplies of construction services, currently set for 1 October 2019, to be delayed until April 2020. Separately, a coalition of trade bodies in the construction sector have written to the chancellor with a similar request.

The trade bodies highlight that:

  • the timing of these changes could not be worse given they are due to take place just before the UK is expected to leave the EU, quite possibly on ‘no deal’ terms;
  • reverse charge VAT will be yet another burden on construction employers on top of other pressures facing the industry, such as material price rises, increased pension contributions and skills shortages; and
  • the changes could lead to a loss of productivity, reduced cashflow and, in the worst cases, to a hit on jobs, tipping some companies over the edge, particularly small businesses.

A recent survey by the Federation of Master Builders indicated that 69% of small and medium-sized construction businesses were not even aware of the new reverse charge.

Issue: 1454
Categories: News