Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the potential effect on companies of introducing a reverse VAT charge for the building and construction services sector with effect from 1 March 2021 in the context of the ongoing covid-19 outbreak; and if he will make a statement.

The Government remains committed to introducing the VAT reverse charge for building and construction on 1 March 2021. VAT fraud in this sector still presents a significant risk to the Exchequer.

There are several UK anti-fraud reverse charge measures already in operation and their impact on business and supply chains is well understood and explained in the Impact Assessment for this measure. The Government provided a very long lead-in time for this measure ahead of the original implementation date of 1 October 2019 and has listened carefully to industry concerns, especially those in relation to cashflow and the impact of the COVID-19 pandemic on the sector. The Government has subsequently delayed the introduction of the reverse charge on two occasions to give businesses even more time to prepare.

HMRC continue to work closely with the construction industry, providing support and communications to ensure that businesses are fully aware and can prepare for cashflow challenges ahead of implementation on 1 March 2021.