Agile construction firms are up for the challenge in 2022

There’s no doubt about it: things are tough right now for construction firms.

But equally we know that specialist subcontractors are agile, adaptable and able to deliver great projects on time and on budget, come what may. Whatever lies ahead in 2022, Hudson Contract will be here to help SMEs get on with building their businesses.

As we enter the new year, firms are having to contend with a whole heap of government legislation, including new green costs from Clean Air Zones and the scrapping of the red diesel rebate, the ongoing shambles of the VAT domestic reverse charge regime and the travel hassle faced by European subbies.

Clean Air Zones are coming to a city near you soon and look like another revenue raiser for the taxman with charges for vehicles which do not meet strict emissions standards. Along with the “reform” of rebated gas oil, it represents a two-pronged attack on a sector which – unlike most civil servants – cannot work from home and relies on moving around to deliver projects and get things done. At a charge of around £10 per vehicle per day, will it be enough to scrap a dirty old van and buy a new vehicle? Or is it another cost that businesses will have to bear in a low-margin industry?

The VAT domestic reverse charge is still causing firms a headache. Clients have told us some tax inspectors don’t even understand the new rules. It is clear the government ignored the warnings of industry during the consultation exercise and is now endangering the viability of many specialist contractors by switching them from payment traders to repayment traders, badly damaging their cash flow and taking an age to issue refunds. We know of some companies which are now using cash generated by profits to fund their VAT payments.

Some subbies returning from eastern Europe after Christmas with families back home are falling foul of new immigration rules at their airport departure gates. EU, EEA and Swiss citizens can still travel to the UK for holidays without needing a visa though anyone heading to Leeds or Birmingham at this time of year is more likely to be packing a trowel and a spirit level than a pair of Speedo’s and a bottle of suntan lotion. Those with settled or pre-settled status will be allowed to travel to the UK to work, but those eligible and yet to claim may struggle. We warned last year there is no sensible route for construction firms to bring in self-employed tradespeople from the EU - the working visa system only works for large firms who are recruiting abroad for full-time employees.

A belated happy new year to all of our readers from everyone at Hudson Contract and remember, we exist to help our clients avoid tripping up on tax and employment laws so they can get on growing their businesses and “building back better” or whatever the latest slogan is!

 

Ian Anfield

Ian Anfield

Managing Director, Hudson Contract

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