As you’ll be aware major VAT changes for the construction industry will be coming in this October. The new reverse charge VAT approach has been criticised for being inaccessible to most in the industry and is even contradictory in places, says the Federation of Master Builders (FMC). According to Infrastructure intelligence, FMB research shows that over to-thirds of construction SMEs have not even heard of reverse charge VAT. Furthermore, of those who have, more than two thirds have yet to prepare for the changes.
The research cones after the HMRC published its own guidance on the reverse charge VAT. Published just four months before the new system comes into place, many have expressed that this is too little, too late. Although HMRC is due to launch a dedicated website and marketing campaign to promote better understanding amongst the hundreds of thousands of construction companies affected, the FMB warns that the new system will present a serious impact on cash flow and will be a significant administrative burden, changing the way construction companies invoice clients and pay tax HMRC.