好色先生TV

Contractors are calling on the government to scrap its new VAT regime 鈥� just five days after ministers bowed to industry pressure to hit the pause button, delaying the policy鈥檚 introduction by one year. 

Last week鈥檚 climbdown came as main contractors were preparing to bail out suppliers ahead of the original start date, 1 October, because they were concerned the changes could force many smaller firms out of business.

Sarah McCann-Bartlett, director-general of the British Constructional Steelwork Association, is now lobbying for the policy to be abandoned. She said: 鈥淭he policy in itself will still be damaging to subcontractors and government must use this period to review the decision altogether. 

鈥淚f they don鈥檛 then subcontractors will still be facing massive blows to their cash flow and many may not recover from that.鈥�

No fewer than 15 construction trade bodies had called on the chancellor, Sajid Javid, to postpone the start of the new VAT regime so firms had a fighting chance of preparing for the change.

Last Friday, the government agreed to the one-year delay 鈥� six months more than most were hoping for.

HMRC said: 鈥淭o help these businesses and give them more time to prepare, the introduction of the reverse charge has been delayed for a period of 12 months until 1 October 2020. This will also avoid the changes coinciding with Brexit.鈥�

Federation of Master Builders chief executive Brian Berry, who helped to spearhead industry lobbying against the October start date, welcomed the delay, saying the government had made a 鈥渟ensible and pragmatic decision鈥�.

He added: 鈥淭o plough on with the October 2019 implementation could have been disastrous given that the changes were due to be made just before the UK is expected to leave the EU, quite possibly on 鈥榥o-deal鈥� terms.鈥�

So concerned were tier 1 contractors by the changes, they had begun looking at ways to help out firms set to be caught out by the new rules.

The changes would have meant subcontractors were set to take a 20% hit on their cash flow, since they would no longer be able to charge VAT for construction services.

The responsibility of paying VAT would have shifted to the main contractor, in an attempt by the government to crack down on fraud within the sector.

Ali Anderson, VAT partner at professional services firm EY large contractors, said a number had 鈥渟tarted investigating how they might help their subcontractors with cash flow in a different way鈥�.

He added: 鈥淲hether that鈥檚 paying them more quickly or quite what, I don鈥檛 think there鈥檚 a consistent view on that yet 鈥� but it鈥檚 in their interests that their subcontractors aren鈥檛 falling over because they are running out of cash.鈥�

Louise Matchett, group tax manager at construction firm Graham Group, told 好色先生TV: 鈥淲e were discussing internally that for some people we might like to see can we pay them a bit earlier to try and soften the blow.鈥�

And a spokesperson for Wates said: 鈥淚f suppliers have particular issues we will deal with these on a case-by-case basis.鈥�

About 150,000 businesses would be affected by the changes, the government has admitted.