S T O P P R E S S
A major shakeup in the way VAT is paid will come into effect from 1stOctober 2019, affecting the construction and building industry.
Only now is this major, and legal, change hitting the headlines, with just weeks to go.
It will affect more than 150,000 building and construction companies.
It will affect cashflow and working capital for tens of thousands of businesses.
Yet, according to the Federation of Master Builders, 69% of its members have no idea it’s coming.
Currently, a construction/building company suppliers will charge VAT to its customer. The invoice will be paid, including the VAT to the supplier. This VAT value is then held by the supplier until they are due to pay their VAT; thus supporting cashflow and working capital throughout the year.
Now, the reverse charge will see the Supplier issue their invoice as usual, including the VAT amount. However, now the customer will pay the VAT directly to HMRC, not the supplier.
The reverse charge payment is being introduced by HMRC in an attempt to overcome major VAT fraud issues, rife in the construction and building industry.
Eligible businesses, needing to adhere to the new reverse charge, are those contractor and sub contractors who are VAT registered with the CIS and use the CIS to report payments.
Reverse charge VAT will apply to ‘services’ including alterations, construction, demolition, dismantling, extensions and repair to buildings, railways, roads and waterways – on standard and reduced rate VAT supplies, excluding zero rated supplies.
With legitimate businesses no longer able to benefit from holding VAT payments many, it is feared, will experience a huge deficit in their cashflow; threatening growth, expansion and even day-to-day overheads as this vital source of cashflow is taken away.
Did you know about these changes? You’re not alone, as previously mentioned, 69% of FMBs did not, and of those remaining 31%, only 67% are ready. “Ready” means big changes to the way in which a business manages and reports its accounts and of course, “ready” means managing finances.
Whilst we can’t help with the former, here at Cashflow Bridge, we can help with the latter. We are specialists in funding and finance options. We are 100% independent, which means we aren’t tied to any providers, contracts or targets. This means we have only our customer’s interests at heart, guaranteeing to find them the right finance, from the right lender, at the right rate – guaranteed!
Don’t let new HMRC changes risk and damage your business, call us for cashflow loans, stock finance, bridging loans, same day unsecured funds, asset finance, VAT and PAYE advances.
Call today on 07917 871832or 07902 032738, or email email@example.com