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VAT tax change will exacerbate construction downturn, says FMB

The Federation of Master Builders (FMB) is calling for a delay to the implementation of Reverse Charge VAT in response to recent data released in the PMI (Purchasing Managers Index), which revealed that construction activity has fallen for the third month in a row and business optimism has slid to its lowest levels since November 2012.

Brian Berry, chief executive at the FMB, said: “The fall in construction activity for the third month in a row and business optimism being at its lowest levels since 2012 means the building industry is heading towards crunch time. The Government must immediately postpone its plans for a complex and burdensome tax change if the supply chain is to start to turnaround its consistent decline. The time is not right to implement Reverse Charge VAT, which would restrict cashflow and add extra administrative burdens that risk sending small businesses to the wall. The Government’s guidance on the policy is confusing and complex, and it wasn’t published with enough time for companies to prepare.” 

Berry concluded: “Reverse Charge VAT, Making Tax Digital and a no-deal Brexit will create the perfect storm for construction’s small businesses, and (the) PMI data shows that the resilience is not there to weather it.”

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