The Reverse Charge VAT has been designed to ensure that the Government is recovering the correct amount of VAT from the construction industry for work carried out within the UK. Along with other Trade Associations across the industry, the BWF has long voiced concerns over the negative financial impact that the proposed new way of collecting VAT from businesses that provide construction services within the scope of the Construction Industry Scheme (CIS), will have upon the supply chain. Under the proposed changes, VAT will no longer be paid to businesses in the supply chain for providing construction services unless they are providing those services directly to an End User.
Put simply, contractors working for other contractors will no longer receive VAT on the services they supply but will be paying VAT to suppliers of plant and materials. We know that this has the potential to seriously impact cash flow of our members who provide subcontractor services.
Recently, over 40 Trade Associations have come together to write to the Chancellor asking him to reconsider a change in this VAT policy and withdraw the legislation that will introduce Reverse Charge VAT. You can view the letter by clicking here.
Build UK has a practical guide on Reverse Charge VAT which we would urge all of our members to consult – click here to access.