Remove the Reverse Charge VAT for trade contractors and subcontractors

Background

We ask the Government to remove the Reverse Charge VAT for trade contractors and subcontractors and to implement alternative, targeted measures which in our view could prevent VAT fraud without damaging legitimate businesses or causing widespread cash-flow pressure across the construction industry.

Additional details

We believe the reverse charge VAT has fundamentally damaged cash flow across the construction supply chain, particularly for small and medium-sized subcontractors. In our view it has removed vital working capital while businesses still face upfront VAT on materials, labour costs, CIS deductions and long payment terms. We believe this has increased insolvencies, reduced competition, and unfairly shifts the funding burden onto legitimate firms. We call for reform to protect cash flow while still preventing VAT fraud.

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