VAT tax change will exacerbate construction downturn, says FMB


Building site

The Federation of Master Builder (FMB) is calling for a delay to the implementation of Reverse Charge VAT in response to the PMI data published today which shows that construction activity has fallen for the third month in a row and business optimism has slid to its lowest levels since November 2012.

Brian Berry, Chief Executive of the Federation of Master Builders, said:

“The fall in construction activity for the third month in a row and business optimism being at its lowest levels since 2012 means the building industry is heading towards crunch time. The Government must immediately postpone its plans for a complex and burdensome tax change if the supply chain is to start to turnaround its consistent decline. The time is not right to implement Reverse Charge VAT, which would restrict cashflow and add extra administrative burdens which risk sending small businesses to the wall. The Government’s guidance on the policy is confusing and complex, and it wasn’t published with enough time for companies to prepare.”

Berry concluded:

“Reverse Charge VAT, Making Tax Digital and a no-deal Brexit will create the perfect storm for construction’s small businesses, and today’s PMI data shows that the resilience is not there to weather it. If we are to deliver the housing and infrastructure that we need now and in the future, we will need to maintain capacity in the construction industry which means looking after the supply chain. The Government must support the industry by delaying Reverse Charge VAT for six months at least.”