Government delay to Reverse charge VAT introduction
8th September 2019
The Government has announced its decision to delay implementation if Reverse Charge VAT from 1st October 2019 until 1st October 2020 after a coalition of construction organisations, led by the FMB, wrote to the Government to point out the damaging impact this badly-timed policy would have on the sector.
Industry representatives had raised concerns that some businesses in the construction sector are not ready to implement the VAT domestic reverse charge for building and construction on 1 October 2019. And to help these businesses and give them more time to prepare, the introduction of the reverse charge has been delayed for a period of 12 months until 1 October 2020. This will also avoid the changes coinciding with Brexit.
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. 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.”
The Building Engineering Services Association (BESA) chief executive, David Frise, said: ‘This is a big win for our members. If the Government had not delayed the changes, many SMEs would have been caught off guard, facing increased burden and restricted cash flows while simultaneously bracing for the serious disruptions caused by the UK’s planned withdrawal from the European Union on 31 October.”