Following a meeting with HMRC this week, FIS has joined forces with a number of trade bodies from across the construction sector to urge the Chancellor to review the implementation of the Reverse Charge VAT on the 1st March 2021. FIS has consistently pushed back against the introduction of this new mechanism to collect VAT from the construction supply chain. This follows a letter sent prior to Christmas which has to date received no response from the Chancellor.
Re: Call to withdraw reverse charge VAT in Construction
We are writing to you as the major trade bodies in the construction industry to follow-up on our letter of
10 December 2020, and reiterate our call to you to withdraw the introduction of reverse charge VAT.
We have appreciated the Government’s explicit recognition of the role construction is playing in keeping
vital services and infrastructure running during the pandemic, and the construction sector remains
committed to working with the Government to play a positive role in the country’s longer term economic
Reverse charge VAT will restrict cashflow in a vital industry, especially to the smallest firms, at just about
the worst time. This policy risks reversing what modest recovery the industry has made from the
pandemic and will limit the scope for protecting and creating jobs at a time when our country needs a
strong construction sector the most.
As set out in our previous letter, the on-going emergency support for the business community in response
to COVID-19 has been very welcome. However, reverse charge VAT, especially if implemented at this
time, risks negating these benefits. Indeed, the combination of the latest lockdown restrictions, together
with on-going issues in accessing materials from the EU, means that the timing presently could not be
The policy needs to be withdrawn as a matter of urgency and we hope you will use the forthcoming
Budget to make this change.
In doing so, the Government will avoid significantly negative consequences for the industry. Due to the
public interest nature of this issue, we will be releasing this letter to the media.
Whilst FIS will continue to press, however, companies should be starting to prepare for introduction.
FIS has developed a Reverse Charge VAT toolkit that includes a simple introduction, template resources and a cashflow calculator available here.
A full copy of the letter is available here:.Joint-letter-to-Chancellor-14-January-2021