As reported in the Telegraph this weekend, FIS joined leaders from across the construction sector calling on the Chancellor to delay the controversial change in VAT which they say poses a threat to the survival of firms hit hardest by the virus crisis.
Industry chiefs representing thousands of construction companies warned that an upcoming VAT “reverse charge” would put pressure on cash-strapped firms and further damage the troubled sector.
Concerns about construction firms going under have accelerated during the pandemic, with more than 4,000 projects with a combined value of £68bn delayed or cancelled by Covid-19, according to research company Barbour ABI.
In a joint letter, more than a dozen trade bodies, including the Finishes and Interiors Sector, said that many firms no longer had the financial resources or man power required to prepare for upcoming changes, with many of the required staff – including in finance or IT – currently on furlough.
The new rules, which are being introduced to combat tax fraud, will see VAT charges on certain construction services paid directly to HMRC instead of the supplier.
The letter make it clear that changes to the way VAT payments were collected would pile on administrative burdens for those struggling with the economic impact of the pandemic.
The new measures are also likely to squeeze cash flow for businesses no longer receiving VAT payments, particularly smaller firms and those that have requested government-backed rescue loans. Services affected by the new reverse charge include construction work on larger structures, such as buildings, roads and bridges.
Industry groups have asked for the changes to be pushed back by at least one year as companies grapple with the effects of the crisis.
Britain’s building and construction industry employs nearly three million people across 315,000 firms, and represents 9pc of GDP. Industry chiefs said delaying VAT reverse charges would help support the wider economic recovery.