Following a cross-industry campaign to delay the implementation of reverse charge VAT for construction, led by the Federation of Master Builders (FMB), the government has announced it will be pushed back by five months. While the industry called for a delay of one year, five months will give small businesses in the supply chain much-needed breathing space to work towards recovering cashflow.

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 them recover. In the meantime, the industry will continue working with officials in HM Treasury and HMRC to implement a communications campaign that prepares the industry.”

Berry concluded: “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.”