HMRC has bowed to pressure and has announced a one-year delay to 2020 to the introduction of reverse charge VAT in the construction sector, due to be implemented next month after industry bodies and accounting specialists highlighted concerns about lack of preparation and the impact on businesses.
We see this as a welcome move given that the evidence shows many firms were either unaware or unprepared for the move.
A Federation of Master Builders (FMB) survey of around 8,000 SME construction firm members found that 69% were not aware of reverse charge VAT at all. Of those who were, 67% have not prepared for the changes.
HMRC says it will now focus additional resource on identifying and tackling fraud in the construction sector.
It will work closely with the sector to raise awareness and provide additional guidance and support to make sure all businesses will be ready for the new implementation date.
Where companies have already changed their invoicing system, HMRC says it will take the change of date into account.
A 12-month delay will allow time for the HMRC to put a much larger information campaign and it is good to see that there are plans to work with professional bodies in the construction industry.
Here at Geens, we can work with your business to get ready for the changes in readiness for October 2020. Please contact email@example.com.