The government has announced that the rollout of reverse charge VAT for construction has been pushed back by five months, a move that has been welcomed by the Federation of Master Builders (FMB).
The reverse charge was due to come into effect on March 1st next year, a major change to the way in which VAT is collected – meaning that the customer in receipt of the service will have to pay VAT due to HMRC, instead of paying the supplier.
It will only be applicable to those businesses or individuals that are registered for VAT in the UK, although it won’t apply to consumers. If you supply or receive certain services reported under the Construction Industry Scheme, you will be affected.
Brian Berry, chief executive of the FMB, described the move to delay as a “victory for common sense”, saying that it will give small businesses across the entire supply chain some breathing room to help them recover cashflow.
“While pushing back reverse charge VAT is a step in the right direction to aid recovery, I’m also calling on the government to intervene in the SME sector to boost growth.
“A package of measures that includes a national energy efficiency retrofit strategy to upgrade our homes, opportunities for SME house builders, and support for SME employers to train apprentices will all be the cornerstones of a comprehensive recovery plan,” he went on to say.
To help prepare yourself for the implementation of the reverse charge next year, HMRC advises you to check whether it will affect your sales, purchases or both, as well as ensuring that accounting systems and software are up to date.
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