Delay in VAT rule change gives construction firms room to breathe amid COVID-19

The Chartered Institute of Building (CIOB) has welcomed the Government's announcement that the start of the 'reverse charge' rule for VAT payments for construction services will be pushed back from October 2020 to March 2021, giving the industry breathing space amid Covid-19.

The announcement comes off the back from a recommendation made by the Construction Leadership Council's ‘Roadmap to Recovery’,which the CIOB feeds into. The 'reverse charge' rule has already been delayed once in the face of evidence from industry and professional bodies that many of their members were unaware of or unprepared for the rule change.

The Government is also preparing an amendment to the rules: any construction business that seeks an exemption from reverse charging on the grounds that they are end users or intermediary suppliers will have to inform their sub-contractors about their status in writing.

Eddie Tuttle, Director of Policy and Research at CIOB, said:

“This is enormously welcome news. Construction professionals need to be focussing at this time on measures that will ensure the sector rebounds from Covid-19 in a sustainable and safe manner, not worrying about technical rule changes like this. As the Construction Leadership Council have argued in their Roadmap to Recovery, delaying the implementation of reverse charging will be a key step towards stimulating demand and creating the robust pipeline we need for future growth.”