New research from the Federation of Master Builders has found that more than two thirds of construction SMEs have not heard of the new Reverse Charge VAT rules being introduced on 1st October 2019.
As a result, the body is now calling for a six month delay to the changes, which could see the cash flow of more than 150,000 construction companies affected.
The FMB’s research also found that of those who did know about the new rules, 67% have not prepared for the new system.
The new rules coming into force mean that companies within the construction supply chain will no longer receive the 20% VAT when they submit bills. Instead, it will be paid directly to HMRC in a bid to reduce VAT fraud in the industry.
Not only will cash flow be affected, but the new rules will place a further administrative burden on construction companies who will need to ensure their accounting system is capable of handling the change.
A six month delay to the introduction of the changes as called for by the Federation of Master Builders would allow businesses more time to prepare for the changes, introducing a new construction-specific accounts and cost management system if required.
Choose construction-specific accounting & cost management software today
Evolution Mx from Integrity Software is Reverse Charge VAT ready, and can help to minimize the administrative burden that is expected to be felt throughout the industry.
If you would like to know more about Evolution Mx, call us today and book your free, no obligation, demonstration on 03453 40 30 40 (UK) or 01 6205599 (IRE). Alternatively, you can contact us here.