VAT Changes in Construction – POSTPONED!

Just 11 days ago I blogged about the new rules for VAT and construction services…..

Well, HMRC have actually listened to businesses and construction industry representatives who have been saying that the changes have come in too soon and businesses just aren’t ready – on top of Making Tax Digital and impending (or not?!) Brexit, it’s all just a bit too much!

So they’ve announced that the new rules won’t come into effect on 1 October 2019 as previously planned – they will be deferred for a year until 1 October 2020.

If you’ve already started to prepare for the changes, it will be a bit of a pain to unwind what you’ve done but it will come as a huge relief to many that have not had enough information from HMRC in time to be ready for 1 October 2019.

I welcome the deferral as it will give businesses more time to, as my Dad would say, “get all their ducks in a row” and have a more complete understanding of the effects of the changes.

As tempting as it might be to just forget about it for a year, I would urge you to take the extra time to assess the impact on your business (particularly on cash flow) and put in place measures to mitigate the impact, which may include switching to monthly VAT returns, switching to invoice basis and/or leaving the flat rate scheme.

HMRC’s notice about the deferral can be found here

If you would like to discuss this further please get in touch 0116 2423400

Katie Kettle, Technical Manager

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