The Government must delay the implementation of damaging VAT changes in the construction industry, demands a coalition of the major trade bodies in the sector, in a letter to the Chancellor published this week.
The letter calls on the Chancellor to push back the implementation of reverse charge VAT, due on 1 October, by at least six months due to the fact that:
- The timing of these changes could not be worse given they are due to take place just before the UK is expected to leave the EU, quite possibly on ‘no-deal’ terms;
- Reverse charge VAT will be yet another burden on construction employers on top of other pressures facing the industry, such as material price rises, increased pension contributions and skills shortages; and
- The changes could lead to a loss of productivity, reduced cashflow and in the worst cases, lead to a hit on jobs, tipping some companies over the edge, particularly small businesses.
Commenting, CECA chief executive Alasdair Reisner said: “Civil engineering contractors are extremely worried about the impact of the forthcoming new rules on their immediate cashflow and the impact that this will have on business sustainability.
“The construction sector is already struggling due to ongoing political uncertainty, with declining workloads for many members.
“The introduction of the reverse charge VAT may push small contractors into the red, as they do not have the resources to manage the immediate impact of the legislation change.
“We are therefore calling on Government to delay the implementation of reverse charge VAT and work with industry to help businesses prepare for the new rules in the best possible way.”
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