The Chartered Institute of Taxation (CIOT) is urging HM Revenue & Customs (HMRC) to delay the introduction of the VAT reverse charge for the construction industry.
The CIOT says that SME construction companies have not had the required time to prepare for the change, voicing their concern over the potential for there to be disputes between suppliers and consumers.
In excess of 150,000 businesses will be affected by the change in the construction and building sector.
The CIOT has laid out its concerns about the VAT reverse charge in a letter to HMRC, with the new rules set to be introduced on 1 October 2019.
Linda Skilbeck, Vice-Chair of the CIOT’s Indirect Taxes Sub-Committee, said: “We are concerned about the combination of a substantial lack of awareness, and a lack of preparedness even among those businesses who are aware of the measures.
“We urge the Government to delay the current implementation date. A start date of 1 April 2020 is more appropriate. This should allow time for a dedicated information campaign to be operated by HMRC, with the assistance of industry and professional bodies.
“Such a campaign could include direct communications with businesses in the sector, particularly those registered for the Construction Industry Scheme, as well as improvements to the content and accessibility of guidance on GOV.UK.”
The tax body believes that a delay will help to reduce the number of disputes that may arise, while the Federation of Master Builders expressed concern that a recent survey found that 69 per cent of SMEs in the construction industry have not even heard of the new reverse charge.
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