Major changes to the way VAT works in the construction industry that were scheduled to come into force this autumn have now been delayed by HMRC until October 2020
This ebook from construction finance specialist Aldermore Bank breaks down how the new reverse VAT system will work and why it is being implemented to combat possible fraud and make the collection of VAT more efficient.
More importantly, it sets out why construction firms should resist the temptation to put the issue on the back burner and instead make the most of the extra time they now have to prepare for the changes.
With the new regime set to impact on both business administration and cash flow, Aldermore argues it is essential that companies are fully aware of the implications and how to deal with them.
It offers a number of practical steps construction firms can take to get ready, from assessing what changes might be needed to billing and accounting systems through to analysing customer and supplier lists to determine where reverse charging will apply.
Companies should also identity which customers are the “end users” who will continue to pay VAT to them and speak to their tax advisor in preparation for next year.
Cash flow implications are another key area to consider, as from next October companies are likely to receive less VAT than before – and the change could be significant.
This only emphasises once more the importance of companies familiarising themselves with the changes well ahead of their implementation in October 2020.