UK subcontractors express concern about slow VAT reclaim process

UK contractors have expressed concern about what they say are slow HMRC VAT reclaim procedures. In terms of new VAT rules, certain companies in the construction supply chain no longer charge VAT on their bill and must instead apply for a rebate from HMRC. According to an industry reporter, contractors say the process is inefficient, causing cash flow problems for contractors. 

UK construction VAT reverse charge rules

The UK recently introduced domestic VAT reverse charge regulations for the construction industry.  

In terms of the regulations, subcontractors do not account for VAT. Rather, the contractor that hires the subcontractor must account for the VAT itself.  

The new regulations were enacted in part to reduce the potential for fraud by eliminating the possibility of a subcontractor charging VAT but then not paying the VAT to HMRC.

Cash flow concerns from the start

The reverse charge regulations were controversial from the beginning. Prior to their implementation, subcontractors expressed concern about likely cash flow consequences.

Under the previous system subcontractors would charge VAT on their bill. They would hold the VAT incurred, periodically paying it to HMRC. 

Ensure your VAT reclaim process is as efficient as possible

Ensuring your company has efficient and effective VAT reclaim processes in place is often an important way to enhance profits and manage cash flow. 

If you’re facing a cash flow squeeze, it’s essential to ensure that your claims are never delayed due to errors or missed deadlines. 

VAT IT’s technology-driven VAT reclaim solution maximises VAT reclaim opportunities and makes claiming back your VAT as efficient as possible .