ACCOUNTANTS JOIN CALL TO DELAY CONSTRUCTION VAT CHANGE CHAOS
Leading accountants have joined the call to postpone VAT changes which could cause a cash-flow crisis across construction.
More than 150,000 construction companies are facing a 20% drop in cash flow when planned VAT changes come into force in October.
The “domestic reverse charge” changes mean companies in the construction supply chain will no longer receive their 20% VAT payment when they submit bills.
The VAT cash will instead be paid direct to HMRC by the customer receiving the service who will reclaim it in the normal way.
Accounting giant RSM has now joined the chorus of opposition to the scheme.
Ian Carpenter, partner at RSM, said: “This new measure will have a profound impact on a construction business’s invoicing routine.
“Further, it will have a serious cashflow impact, most likely in the early stages of the supply chain, where contractors will no longer charge and collect VAT from their customers.
“This VAT cash can sometimes be used by businesses to fund working capital, before it’s paid over to HMRC via its VAT return.
“Whilst this measure is being brought in by HMRC to fight fraud, the rules apply to all in the industry. Failure to comply will risk delayed payments by customers and penalties from HMRC.
“Businesses should be reviewing their supply chain now to get reading for the changes which are less than two months away.
“Better still, we would urge Government to consider delaying the implementation date to allow the sector a chance to properly prepare.”
UK CONSTRUCTION FACES ‘PERFECT STORM’ AS SUPPLY SHORTAGES LOOM
UK construction is facing a “perfect storm” of growing skills and materials shortages as demand for building reaches record levels driven by home improvements, the housing market and new i ...
DEMAND FOR CONSTRUCTION WORKERS CLOSE TO 20 YEAR HIGH
The staff shortage in construction is continuing to bite, with 33,000 job vacancies for the period of April to June according to the latest figures from the Office for National Statistics. It is the s ...
2021 BUILDING MATERIALS SHORTAGE: WHAT IS THE PRICE OF BUILDING MATERIALS?
Covid-19, Brexit and booming demand are combining to drive up prices for the essential materials the UK’s construction sector desperately needs. Bluebeam takes a look at the 2021 build ...
MORE THAN 160,000 STILL FURLOUGHED AT END OF APRIL
More than 160,000 construction workers remained on furlough at the end of April, new figures have shown. Data released by the government this week showed that 166,600 roles in the sector were bei ...
CONSTRUCTION LEARNERS TO GET SITE SKILLS CARDS
Construction trainees will soon be given their own skills cards to help oversee work placements. The new Industry Placement Card will help support learners transitioning from the classroom into the ...
NUMBER OF FURLOUGHED CONSTRUCTION WORKERS FALLING FASTER THAN WIDER ECONOMY
Number of furloughed construction workers falling faster than wider economy Latest HMRC data shows size industry’s furloughed workforce shrank by 15% in March The numbe ...