The Chartered Institute of Taxation (CIOT) has welcomed today’s announcement that construction firms will get an extra year to prepare for a major change in accounting for VAT.
The CIOT had written to HMRC in July setting out its concerns about the construction industry’s readiness for the new VAT reverse charge that was scheduled to be introduced from 1 October 2019 and requesting a delay.
The CIOT hopes the delay to 1 October 2020 will lessen the likely flurry of disputes between suppliers and customers as to whether or not VAT should be charged.
Some 150,000 businesses in the construction and building sector will be affected by the change. A recent survey by the Federation of Master Builders had indicated that 69 per cent of construction SMEs surveyed had not even heard of the new reverse charge. CIOT members had reported a similar lack of awareness among SME construction businesses.