The VAT reverse charge for building and construction services has been delayed until 1 March 2021, the government has announced.
The charge had originally been due to commence in October 2020, having previously been delayed by a year in September 2019. But industry chiefs had warned that the Covid-19 pandemic left small and medium-sized (SME) house builders unprepared to adhere to the changes.
Sixteen construction leaders penned a letter to chancellor Rishi Sunak this week calling for the VAT reverse charge to come into effect in 2021 — and the government has granted the request.
The government announced the delay on Friday morning, which has been described by the Federation of Master Builders (FMB) as a “victory for common sense”.
Brian Berry, chief executive of the FMB, which spearheaded the cross-industry campaign to delay the implementation of the VAT reverse charge, said: “The coronavirus pandemic has had significant impacts on cashflow for small to medium-sized (SME) construction firms. The reverse charge VAT is being delayed by five months is a victory for common sense.
“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