VAT reverse charge to impact over 1.2 million construction workers
HMRC’s new VAT domestic reverse charge for building and construction services comes into effect from 1st March 2021.
With this in mind, specialists from Chartered Accountancy practice, Sheards Accountancy delve into the impact the legislation will have on both the construction and property industries.
The reverse charge will apply to all CIS registered businesses buying and selling construction services that are subject to CIS reporting, apart from those that are zero-rated, up to the point in the supply chain where the customer is the end-user. At this point, the normal reporting and collection of VAT resumes.
Where the reverse charge applies, rather than the supplier charging and accounting for the VAT, the recipient of those supplies accounts for the VAT. In practice, this will mean that where there is a chain of contractors/subcontractors working on a building project, for example, none of those entities will add VAT to their invoices, other than the main contractor who is invoicing the end-user of the property.
Currently, in Great Britain, there are 290,3741 registered construction firms with 1,279,000 people employed in the industry. The construction sector has a monthly output of £14,014 million2 with an average weekly earning in the industry of £6481. But the industry has faced a number of challenges in recent years, which saw 3,502 insolvencies in the construction sector in 2019, equating to around a fifth of all insolvencies.
Kevin Winterburn, director at Sheards Accountancy commented: “The changes are a response to what HMRC have described as significant VAT fraud in the industry but they do in a way reflect a lack of trust to those operating in the sector from HMRC. The changes could have huge impacts on a company’s cash flow, so it’s essential that construction workers speak to their advisors, traders and suppliers ahead of 1st March.”
One of the biggest challenges for businesses in the sector is cash flow and a recent survey revealed that 1 in 53 construction companies say cash flow is a constant problem, with 84% of construction companies reporting that they had problems with cash flow.
When the VAT domestic reverse charge comes into play on the 1st March 2021, experts predict this could have a negative impact on the already stretched cash flow issues in the construction industry, so it’s important for firms to review their existing work pipelines and relationships to prepare for the change.
Kevin summarises: “The VAT domestic reverse charge has been a long time coming and it’s something everyone in the industry has been aware of since 2019. But with the 1st March quickly approaching, it’s important for firms in the construction and property industries to start implementing changes to the way they work to make sure they are covered.
“We hope by highlighting the key considerations for everyone in the industry, including suppliers and customers, the changes and responsibilities of each party will be clearer.”
To find out more about the VAT domestic reverse charge please visit: https://www.sheards.co.
SGS Scaffolding sold to industrial services firm
Hull-based scaffolding and access contractor SGS Ltd has been acquired by a North East-based industrial services business.
SGS Ltd has been acquired by Wescott Industrial Services Ltd, which is looking to increase its in-house capabilities and geographical presence. The value of the deal has been undisclosed. Established in 1994, SGS Ltd is a main supplier of scaffold access and support systems for the Large Industrial, Petrochemical, Waste to Energy and Pharmaceutical and Food industries, as well as providing services to domestic and commercial projects. The NASC member firm employs around 70 people and operates nationwide for clients such as Engie, BAM Construction, Amco Griffen and Gassco Gas Terminal. Westcott delivers a range of surface preparation and industrial blasting and painting services to sectors such as Renewables, Marine, Oil & Gas and infrastructure, which often requires the use of large scaffold structures sourced from sub-contractors. As a result of its acquisition of SGS Ltd, Wescott Industrial Services will be able to offer its existing and new clients fully integrated scaffolding services, which it previously sub-contracted. It will enable the company to better control this element of the supply chain, along with the overall delivery of projects, the company said. Founded in 2010, Wescott Industrial Services Ltd is owned by three shareholders, Mark Duffy, Matthew Doyle and Kevin Carruthers, who joined the business in 2016. Employing around 80 people, Wescott Industrial Services Ltd has established itself in the energy sector supply chain with its provision of on and offshore fabric maintenance and rope access supervision capabilities. The latest acquisition was led by Wescott Industrial Services Ltd’s managing director Mark Duffy and commercial director Matthew Doyle. Advising the directors of Wescott Industrial Services Ltd on the acquisition of SGS Ltd was Newcastle-based RG Corporate Finance led by partner and head of corporate finance Carl Swansbury and senior manager Alex Simpson. Doyle said: “The acquisition of SGS Ltd is an essential component of our strategic growth as we increase our capabilities and market presence in new and existing sectors. “Bringing such a well-established and experienced scaffolding contractor into our business will offer considerable benefits to both businesses and support the continued scale-up of our operations.” Alex added: “The directors of Wescott Industrial Services Ltd have delivered positive growth for the business since joining in 2016 and this acquisition is a natural next step as it looks to increase market share and diversification into new industries. “Both companies have respected client lists of blue-chip organisations that will see the benefit from the combined capabilities of the two businesses.”Have Your Say on CISRS CPD
CISRS continues to seek anonymous views on its Scaffolders CPD refresher training.
Time is running out to have your say on the CISRS CPD course, the survey is set to close at the end of this month. CISRS who launched the survey back in November 2020 is aiming to gauge anonymous views from the industry on how the CPD course structure can be improved. CPD caused quite a stir when it was brought in but CISRS say despite the initial reluctance to its introduction, the course has proven very popular, with early feedback collected from delegates upon completion had been overwhelmingly positive, they said. The mandatory two-day CPD/refresher course is a key element required to renew CISRS Part 2 Scaffolder and Advanced cards.
Dave Mosley, CISRS Scheme Manager, said: “Having now passed the halfway point in the five-year CPD cycle, with more than 60 per cent of those required to attend the CPD programme having now undertaken it, we would be very interested in hearing their views now that they have had time to reflect.
“We want people to be honest in their responses as such the survey is anonymous. We do, however, want the comments to be constructive. Remarks like “it’s rubbish” will not help us identify areas that require consideration.
“If there are specific elements of the programme that someone has concerns with, we want them to let us know and if they can offer solutions to these issues they would be welcomed.”
To complete the survey, click here. It will remain open until February 28 2021.
Brogan Group expands UK operations nationwide
The Brogan Group has announced it’s expanding its UK operations nationwide.
The multi-disciplined access provider that predominantly operates in the London and South East areas is extending it’s powered access coverage to now cover Manchester, Birmingham, Liverpool, M4 corridor, Leicester areas and beyond. Brogan Group says its main depot in Cambridge is set up to service projects nationwide and having increased their logistics fleet, service crews and machine numbers mast climbers and hoists they can offer the same services in the North of the country. To support the expansion, the firm opened the doors to a new regional office in Manchester at the start of the year. The office, located a stone’s throw away from Piccadilly train station, will be a base for its Business Development and Estimating Teams in the North. Brogan Group has recently secured several mast climber projects in Birmingham and is currently supplying a number of hoists on projects in Leicester, the company said.Lyndon SGB provides access solutions on one of the UK’s largest scaffolding projects
National scaffolding and access contractor Lyndon SGB is supplying complex access solutions on one of the most prestigious and largest scaffolding projects in the country.
Announced today the four-year contract will see Lyndon SGB provide a multitude of scaffolds on the £330 million ‘Our Town Hall’ renovation of the iconic Manchester Town Hall.
The vast refurbishment of the Grade 1-listed Victorian gothic revival landmark built in 1877 aims to restore the building to its former glory and involves extensive repair work internally and externally, by main contractor Lendlease.
Lyndon SGB is the chosen scaffolding and access contractor, providing millions of pounds of in-house designed scaffolding and access solutions across the project, including large independent scaffolds, crash decks, a bespoke 90m clock tower scaffold, 34 chimney stacks/saddles and 8,000m2 of temporary roofing weather protection across the site.
More than 50 Lyndon SGB scaffolding operatives will be working on the UK’s largest commercial scaffolding project – currently under strict COVID-19 secure protocols during lockdown.
In addition, as part of the KPI (Key Performance Indicators) for the scaffolding program, a dozen apprenticeships will be launched on the project over the life of the contract.
Lyndon SGB say there are already seven apprentices in the Construction Industry Scaffolders Record Scheme and in-house training schemes, with three already operational on site and a further four working in the firms new single scaffolding depot in Manchester. All are employed full-time and working hard in their training, while preparing for college sessions run by learning provider The Growth Company.
Lucas Findlay, 17, from Blackley, said: “Being an apprentice provides the skills and support in order to provide myself with a stable career in scaffolding. I have started at the bottom and the progression I can see ahead of me seems limitless.
The opportunity to learn on the job on such a high-profile project shows the quality of training and trust we are given. I didn’t realise the extent of the challenges of building the scaffolding around such a building, until I saw it for myself and I am pleased to be a part of it.”
Mark Davies, 24, from Collyhurst, said: “Working on the Our Town Hall project is an amazing learning experience, with the opportunity to get up close and personal to one of the oldest buildings in the city.
I have walked past this building so many times over my lifetime without appreciating the details, including what it is like inside. From working in the Great Hall, checking out the views over the city and admiring all the statues, the whole project leaves you in awe.”
Councillor Nigel Murphy, deputy leader of Manchester City Council, said: “Creating opportunities for local young people to build firm foundations for future professional careers across a range of trades is a key goal of the Our Town Hall project and will be an important part of its legacy for the city.
“This is a building which has served Manchester for more than 140 years and through this once-in-a-lifetime scheme, it will continue to play an integral role at the heart of our civic life for generations to come.”
Lyndon SGB Managing Director, Stuart Robinson added: “We are incredibly proud to have secured the scaffolding and access provision on this incredibly important national building renovation. Few firms in the UK could have been selected for such an enormous, complex and highly skilled project.”
Kevin Fitzpatrick, Lyndon SGB Operations Director, said “The newly-operational single scaffolding depot at Manchester is perfectly placed to provide a slick, safe and efficient service on this enormous and iconic project.”
Lyndon SGB North West Regional Manager, Jon Cooke, added: “This is a once in a lifetime opportunity to demonstrate our unique and unrivalled skills, we deliver projects like Our Town Hall because we have the ability to deliver on programme and on budget.”
Lendlease Group’s David Cadiot said: “Our Town Hall is in the top 2% of important historical structures in the UK, we need and must have a supply chain that can deliver, that is why we chose Lyndon SGB.”
Covid lockdown causing some CISRS card renewal problems
It’s been uncovered that some scaffolders are finding it difficult to renew their CISRS cards due to the Covid lockdown but CISRS says, ‘don’t panic!’
With around half of the CISRS registered scaffolding training centres across the UK temporarily closed due to the coronavirus pandemic, a number of scaffolders are experiencing problems booking CPD courses to renew their CISRS cards.
Many of whom have recently contacted Scaffmag concerned with the ongoing training situation. One scaffolder based in Scotland that contacted us is struggling to find employment because of it.
“My card expired in August last year but I am unable to book to complete my CPD. I am looking for work at the moment but every time a potential employer enters my details into the database it says my card has expired, so I don’t get the job,” he said.
We reached out to CISRS to get their take on the situation: “Some scaffolders may be experiencing problems depending if local centres are open or not but they do not need to panic,” says Dave Mosley CISRS Scheme Manager.
“The centres that have been closed are reviewing their position constantly. And the majority of them originally suggested that they would reopen week commencing 22nd February, so by the end of the month we could have a lot more capacity but obviously that depends upon what the Government says at the time, which may have some effect on their decision.”
The mandatory two-day CPD/refresher course is a key element required to renew Part 2 Scaffolder and Advanced cards but booking CPD courses is not an issue for centres that are open, claims CISRS.
The courses are running regularly they say but that depends on where the scaffolders are located in the country. In some areas training centres that are open have CPD courses available at the end of February early March onwards.
However, CISRS has stressed that it is important to book any courses required well ahead of time wherever possible. And those training establishments that have stayed open are running with reduced capacity with strict COVID precautions.
Employers Need To Show Leniency
For those that are finding it difficult to renew cards that have expired CISRS has urged contractors, employers and those responsible for site access and card checking procedures to show leniency towards these scaffolders.
Laura Weekes at CISRS said: “We are asking employers and contractors to accept any recently expired CISRS cards expired due to this and previous lockdown situations. We are always happy to speak with employers to confirm this if they get in touch.”
CISRS Helpline Number: 0844 815 7223 Email: [email protected]
Construction continues steady recovery
The UK construction industry has hit the ground running according to information from construction data provider Builders Conference.
Their latest data shows that the number of construction contracts awarded in January increased, following the traditional slowdown in December. However, with another national lockdown now in place, the effects of the coronavirus restrictions continue to be felt and both the number and value of contracts remain below pre-pandemic levels, according to Build UK’s State of Trade for Construction. The number of contracts awarded in January was 551, a 53% increase compared to December (360) and the second highest result since April 2020 when the first lockdown was still in place. It is still 11% lower than the average number of contracts awarded each month in the year prior to coronavirus (621 between April 2019 and March 2020) and 17% lower than in January 2020 (666), although this was a particularly strong month.
Value of Contracts Holds Up
The value of contracts awarded in January was £6.2 billion. Whilst this is almost 50% down on the previous month, the £12.2 billion worth of contracts recorded in December included two large rail projects worth a combined £8.5 billion. In a positive sign for the industry, the value in January is 3% higher than the monthly average of £6.0 billion between April 2019 and March 2020, although it remains 21% lower than January 2020 (£7.8 billion). 70% of all the contracts awarded by value were in the private sector. Almost half were housing (188 projects worth a total of £2.9 billion), including a £940 million contract to build 2,500 homes on the Teviot Estate in Poplar, East London. There were also 24 road projects worth £962 million (15%) and 110 education projects with a total value of £823 million (13%). 93% of the contracts were in England, with London leading the way with 31% and the Midlands recording 16%.Lack of Tender Opportunities
The number of tender opportunities in January was 366, down from 419 in December. This is 52% below the monthly average of 768 projects available for tender between April 2019 and March 2020. It is also 53% lower than January 2020 (786). At present, there are just 276 tender opportunities available until the end of April 2021, according to Builders’ ConferencBalfour Beatty awarded £32m NHS job
Balfour Beatty has announced that it has been awarded a £32 million contract to build a new, world-class Ophthalmology and Orthopaedic health facility in Inverness on behalf of NHS Highland.
This latest contract award will see Balfour Beatty construct the 8,305 square-metre National Treatment Centre, including 24 inpatient rooms, five operating theatres, clinics and outpatient departments. In addition, the company will build minor operation and procedure rooms, consulting rooms, a café, children’s play area and office support rooms. The new facility will provide elective orthopaedic surgery and full ophthalmology services to surrounding communities, helping to reduce the waiting times for patients across the Highlands. Supporting Balfour Beatty’s sustainability target to positively impact one million people by 2040 and improve the prosperity and wellbeing of communities, the team will collaborate with NHS Highland to provide work experience placements and employment opportunities for local college and university students. Hector Macaulay, Regional Managing Director of Balfour Beatty’s UK Construction Services business in Scotland & Ireland, said: “We are proud to be collaborating with NHS Highland to deliver a world-class National Treatment Centre that will improve the experience of patients through improved services and facilities. “This contract award is testament to our expertise and experience in delivering high-quality, complex hospital facilities, having most recently lead the delivery of the landmark NHS Louisa Jordan hospital as part of our efforts to tackle COVID-19, and are currently delivering two new community hospitals in Aviemore and Broadford.” Deborah Jones, Director of Strategic Commissioning, Planning and Performance for NHS Highland, said: “NHS Highland are delighted to be working with Balfour Beatty again in developing this critical new facility which will deliver critical elective treatment for people in the Highlands and surrounding areas.” Early works commenced in Summer 2020 with completion scheduled for 2022. At peak construction, the project will employ a workforce of 300, as well as several work experience placements.Phoenix adds to its team with drive for UK growth
