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Hold off reverse charge VAT until 2020, urges industry

A letter from 15 trade federations has been sent to Sajid Javid MP, the chancellor of the Exchequer, asking for the 1 October 2019 introduction of domestic reverse charge VAT to be delayed until April 2020.

Reverse charge VAT means that the customer receiving the service will have to pay the VAT to HMRC instead of paying the supplier. The reverse charge applies through the supply chain where payments are required to be reported through the Construction Industry Scheme. Making the payment of VAT the responsibility of the customer rather than the supplier, there is no opportunity for the supplier to avoid paying VAT.

The National Federation of Builders, together with the other trade federations, has highlighted the effect the change will have on cash flow and administration costs for an industry already facing increased material and labour costs.

The guidance issued by HMRC was delivered late, is not clear and leaves some questions unanswered. A delay before introducing the charge would give the industry and government time to properly prepare the industry to understand the changes and update systems.

Richard Beresford, chief executive of the National Federation of Builders, said “For an industry facing lighter workloads, increasing pressure on cash flow and an already high rate of insolvency, reverse charge VAT could not have come at a worse time. By delaying the introduction of this measure, the industry will have more time to properly prepare and make their businesses more resilient, and more detailed guidance can be provided to ensure a smooth introduction.”

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Sajid Javid confirms emergency funding is available for Grenfell Tower survivors

Sajid Javid confirms government emergency assistance scheme activated to support immediate response operation following incident at Grenfell Tower.

Communities Secretary Sajid Javid has confirmed that a government emergency scheme – the Bellwin scheme – will be activated to support the immediate response operation following the horrific incident at Grenfell Tower in London.

Under the scheme, financial assistance is available to local authorities to help with immediate costs following a disaster or emergency in their area that involves danger to life or property. They can apply to have 100% of their eligible costs above a threshold reimbursed.

Communities Secretary Sajid Javid said “First and foremost my thoughts are with the residents and families of those affected by the horrific incident at Grenfell Tower. Emergency services and the local community have been tremendous in their response.

“As the Prime Minister has been clear, the Government stands ready to help in anyway possible. We’re determined to stand squarely behind the affected communities.

“Funding through the Bellwin scheme will help councils support the community to get back on their feet.”

The Chancellor of the Exchequer, Philip Hammond, added “We are all deeply saddened by this terrible tragedy and are determined that all necessary support will be there for victims and their families.

“That is why we have made emergency funding available so the local council can provide much-needed services to everybody affected.

“Housing Minister Alok Sharma also confirmed that working with Royal Borough of Kensington and Chelsea, the Government will guarantee that every single family from Grenfell Tower will be rehoused in the local area.”

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Offsite construction expected to feature in Housing White Paper

Communities Secretary Sajid Javid will set out the details of the housing White Paper in a statement to MPs today. The Minister admitted that the current market is “broken” and if we are to fix it we need to consider modern methods of construction such as offsite and modular.

Javid’s speech intends to highlight the need for more homes (at least 250,000 new homes each year) as a matter of priority. Over the weekend Housing Minister Gavin Barwell admitted that the government were currently behind schedule on its goal of building one million new homes in England by 2020.

When unveiling the paper, Javid will say: “Walk down your local high street today and there’s one sight you’re almost certain to see. Young people, faces pressed against the estate agent’s window, trying and failing to find a home they can afford.

“With prices continuing to skyrocket, if we don’t act now, a whole generation could be left behind. We need to do better, and that means tackling the failures at every point in the system.

“The housing market in this country is broken and the solution means building many more houses in the places that people want to live.”

In an interview with BBC Radio 4, the Communities Secretary also indicated the need for a shift in focus on increasing home ownership, an ambition of most post-war Conservative governments. He said “It is a false choice. The reality is we need more homes, whether to rent or buy.”

The White Paper is expected to contain the following measures for meeting demand:

  • A £3bn fund will allow housing associations and councils to fully utilise the skills and facilities of smaller building firms, including support for modern methods of construction, such as modular and offsite
  • Councils will be required to provide the government with an up-to-date plan for housing demand
  • The delivery time for housing will reduced from three to two years between planning permission being submitted and construction works beginning
  • Green Belt is expected to be protected, only to be built on in exceptional circumstances
More on this following the release of the paper later today.
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100,000 modular homes planned to alleviate housing crisis

According to a government white paper which will be published next month, the Government intends to utilise offsite technologies and build around 100,000 modular homes across Britain by 2020.

The report includes measures that will make lending to offsite home builders more attractive to banks.

The rapid delivery of recent offsite projects (sometimes as quickly as 48 hours for some modular homes) has made the construction method a very interesting and viable option for ministers in tackling the shortage of housing in the UK and meet targets.

In an article in The Telegraph, a government spokesperson said “The first and most obvious advantage is speeding up the building of housing. There is pretty good evidence that if you did it at scale it is cheaper.”

The Communities Department hope the measures will lead to 100,000 off-site manufactured home being built over this parliament.

Housing minister, Gavin Barwell commented: “Offsite construction could provide a huge opportunity to increase housing supply and we want to see more innovation like this emulated across the housebuilding sector.”

The Government have initially identified two key areas where support must be given, the first of which is to provide direct funding to construction firms in order to help them deliver new prefabs. Secondly, they want to encourage lenders to make more money available by showing them that the technology is low risk and lucrative.

Whilst compiling their research, Housing Minister Gavin Barwell and communities secretary Sajid Javid visited West Midlands based housing association ‘Accord Group’, who have stated that they can create a three-bedroom house at their factory in just 24 hours. They also visited London firm ‘Pocket’, who specialise in building affordable flats for first-time buyers.

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