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Construction industry unites to demand delay to VAT changes

09 August 2019

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 morning.

The letter calls on the Chancellor to push back the implementation of reverse charge VAT, due on 1st 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.

Brian Berry, Chief Executive of the Federation of Master Builders, said:

“The fact that 15 of the leading construction trade bodies have come together to speak to the Government with one voice on this issue shows the extent to which we are concerned. We urge the Government to rethink the timing of these changes and announce a delay of at least six months. With a potential no-deal Brexit also due to take place in October, the timing could not be worse.”

Steve Bratt, CEO of ECA, said:

"The Government needs to urgently reconsider the timing of their reverse VAT introduction. With insolvencies already at such a high level, and a no-deal Brexit on the horizon, these changes could hit business cashflow at a pivotal time for industry.”

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