Reverse charge VAT for the construction industry has been delayed by a year, just three weeks before it was due to take effect.  The way VAT is collected in the building and construction industry was due to change on 1 October 2019.  Industry campaigners had expressed concerns that many businesses in the sector were not ready for the changes to be implemented.  To help those businesses prepare, and avoid the measure clashing with the UK’s scheduled exit from the EU, the reverse change has been put on hold.

The Chartered Institute of Taxation (CIOT) welcomed the announcement, after months of calling for the reverse charge to be delayed.

Afford Bond’s Tax Director, Chris Regnault said: “This decision will bring great relief to many in the construction industry.  We have been aware of significant confusion amongst many businesses, which has been leading to disputes between suppliers and customers alike, with neither knowing which was the best way forward and who is liable for paying the VAT.  Businesses obviously want to comply with HMRC, but further clarification is much needed.”

Linda Skilbeck, vice-chair of the indirect taxes sub-committee at the CIOT, said: “A start date of October 2020 is more sensible. This should allow time for a dedicated information campaign to be operated by HMRC, with the assistance of industry and professional bodies.”

If you would like help with your VAT requirements, please contact Chris Regnauld at Chris.Regnauld@affordbond.com or use the Contact Us for on our website at www.affordbond.com