FMB praises reverse charge VAT delay decision

THE Federation of Master Builders (FMB) has called the five-month delay of the implementation of reverse charge VAT a ‘step in the right direction’.

The FMB led a cross-industry campaign for a delay to the introduction of reverse charge VAT, arguing that firms needed ‘breathing space’ to work towards recovering cash flow post-Covid-19.

Reverse charge VAT means that the customer receiving the service will have to pay the VAT, rather than including it in the supplier’s invoice. It had previously been scheduled to come into play in October of 2019, but had been delayed until October 2020 following an FMB survey which found that 69% of its members had heard nothing about the impending changes. Reverse charge VAT will now be introduced on 1 March 2021.

Brian Berry, chief executive of the FMB, said, “That reverse charge VAT is being delayed by five months is a victory for common sense. The coronavirus pandemic has had significant impacts on cashflow for small to medium-sized (SME) construction firms. While the industry called for a delay of one year, five months’ breathing space will go some way to helping the recovery. In the meantime, the industry will continue working with officials in HM Treasury and HMRC to implement a communications campaign that prepares the industry.

“While pushing back reverse charge VAT is a step in the right direction to aid recovery, I’m also calling on the Government to intervene in the SME sector to boost growth. A package of measures that includes a national energy efficiency retrofit strategy to upgrade our homes, opportunities for SME house builders, and support for SME employers to train apprentices will all be the cornerstones of a comprehensive recovery plan.”