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, says the Federation of Master Builders (FMB).

Reverse charge VAT was due to come into force from 1st October 2019 but the Government has just announced a delay 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. 

Brian Berry, chief executive at 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. To plough on with the October 2019 implementation could have been disastrous given that the changes were due to be made just before the UK is expected to leave the EU, quite possibly on ‘no-deal’ terms.

“The situation hasn’t been helped by the poor communication and guidance produced by HMRC. Despite the best efforts of construction trade associations to communicate the changes to their members, it’s concerning that so few employers have even heard of reverse charge VAT.”