The Chartered Institute of Taxation (CIOT) are calling for HMRC to delay the new VAT reverse charge, as many SME construction firms have not had adequate opportunity to prepare for a major change in accounting for VAT.
In a letter to HMRC, the CIOT set out its concerns about the construction industry’s readiness for the new VAT reverse charge set to be introduced from 1st October 2019.
The CIOT hopes a delay will lessen the likely flurry of disputes between suppliers and customers as to whether or not VAT should be charged.
A recent survey by the Federation of Master Builders indicates that 69% of construction SMEs surveyed have not even heard of the new reverse charge, with CIOT members reporting a similar lack of awareness among SME construction businesses.
Linda Skilbeck, Vice-Chair of CIOT’s Indirect Taxes Sub-committee, commented, “We are concerned about the combination of a substantial lack of awareness, and lack of preparedness even among those businesses who are aware of the measures.
“We urge the Government to delay the current implementation date. A start date of 1 April 2020 is more appropriate. This should allow time for a dedicated information campaign to be operated by HMRC, with the assistance of industry and professional bodies. Such a campaign could include direct communications with businesses in the sector, particularly those registered for the Construction Industry Scheme, as well as improvements to the content and accessibility of guidance on GOV.UK.”
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