The Budget, VAT and the Construction Industry

16 March 2017

The Spring Budget announced that HMRC will be holding a consultation on how construction industry contractors will treat their VAT supplies going forwards.

This is to counteract fraud in the provision of labour in the construction sector. This type of fraud occurs when a subcontractor charges VAT on labour, but disappears before paying that VAT over to HMRC. The consultation paper will discuss the feasibility of introducing a reverse charge system whereby the recipient of the labour self-accounts for VAT.

Recent examples of where VAT fraud crackdown through the use of the reverse charge system has been successful include, the supply of mobile phones and computer chips as well as wholesale gas and electricity.

We will keep you updated on progress of the consultation which will be published on the 20 March and may lead to wide ranging changes in the VAT treatment.

If you would like further information on the above or find out about our services, please contact Brendan Sharkey or send us an enquiry.