Update September 2019: the Construction Services Domestic Reverse Charge has been postponed until 2020.
HMRC has now issued new guidance in relation to the VAT reverse charge for building and construction services which will be introduced from 1 October 2019. This new guidance supplements and expands upon the guidance note published in November 2019. The legislation change is now contained in SI 2019/892.
This guidance can be viewed here: www.gov.uk/guidance/vat-domestic-reverse-charge-for-building-and-construction-services
The domestic reverse charge is a major change to the way VAT is collected in the building and construction industry.
It comes into effect on 1 October 2019 and means the customer receiving the service will have to pay the VAT due to HMRC instead of paying the supplier.
It will only apply to individuals or businesses in the construction trade who are registered for VAT in the UK (although it will not apply to consumers).
This will affect you if you supply specified services that are reported under the Construction Industry Scheme (CIS). You’ll need to prepare for this change by:
- checking whether the reverse charge affects either your sales, purchases or both
- contacting your regular clients or suppliers to let them know
- making sure your accounting systems and software are updated to deal with the reverse charge
- considering whether the change will have an impact on your cashflow
Will the domestic reverse charge apply to your supply?
If you consider your business might be affected by this change and you would like to discuss this further please do not hesitate to contact our VAT Director Iain Masterton at firstname.lastname@example.org or call 0131 558 5800.