There has recently been a great deal of focus at government level on the health of the construction supply chain. The trade press has been full of articles on measures to improve the fortunes of SMEs, such as the abolition of cash retentions, enforcing prompt payment, and support for partnering-type procurement procedures, with many of the familiar ways of running businesses being called into question. 

HMRC has also turned its attention to supply chain issues, in an attempt to tackle supply chain “missing trader” fraud (MTF). MTF occurs when VAT is collected from customers by businesses but then not repaid to HMRC. It is estimated that without a change in the regulations, MTF could cost the Exchequer about £90m in 2019/20 and £135m the following year. HMRC is, unsurprisingly, keen to address the issue.

The new rules propose to reverse the current position so that it will be the party who receives the supply who is obliged to pay the VAT directly to HMRC

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