HMRC delays VAT reverse charge on construction services

HMRC has announced a five-month delay to the introduction of the domestic VAT reverse charge for construction services, due to the impact of the coronavirus (COVID-19) pandemic on the sector.

Call 01922 628437 or email info@siaandco.co.uk

HMRC has announced a five-month delay to the introduction of the domestic VAT reverse charge for construction services, due to the impact of the coronavirus (COVID-19) pandemic on the sector.

The change will now apply from 1 March 2021 and will overhaul the way VAT is payable on building and construction invoices as part of a move to reduce fraud in the sector. Under the domestic reverse charge, the customer receiving the service will have to pay the VAT owed straight to HMRC instead of paying the supplier, if they report via the Construction Industry Scheme (CIS).

The change was originally scheduled to come into effect from 1 October 2019 but was deferred for 12 months after industry bodies highlighted concerns about the lack of preparation and the impact on businesses. The start date has now been put back from 1 October 2020 to 1 March 2021.

There will also be an amendment to the original legislation. This will make it a requirement that for businesses to be excluded from the reverse charge because they are end users or intermediary suppliers, they must inform their subcontractors, in writing, that they are end users or intermediary suppliers.

HMRC said the additional amendment is designed to make sure both parties are clear in regard to whether the supply is excluded from the reverse charge. It reflects recommended advice published in HMRC guidance and brings certainty for subcontractors as to the correct treatment for their supplies.

HMRC stated that it will continue to focus additional resources on identifying and tackling existing perpetrators of fraud in the construction supply chain. It will also work closely with the sector to raise awareness and provide additional guidance and support to ensure all businesses will be ready for the new implementation date.

For more information about S I Ahmed & Co. Certified Public Accountants, Chartered Payroll Professionals, Tax and Business Advisors, please contact us.

AIA - The Assoication of international accountants AAT - The Association of Accounting Technicians CPAA - Certified Public Accounants Assoication CIPP - The chartered institute of payroll professionals intuit - Certified ProAdvisor Quickbooks - Certified ProAdvisor
About our team

Established since 1999, S I Ahmed & Co is a friendly, pro-active and growing firm of Accountants based in Walsall, providing a comprehensive range of accountancy, book-keeping, payroll, auditing and taxation services at competitive rates throughout the region.

Learn more

Latest news
Contact Details

Please call:
01922 628437

S I Ahmed & Co, 238 Wednesbury Road, Walsall, West Midlands WS2 9QN

Home | Contact us | Site map | Accessibility | Disclaimer | Privacy Policy | Help |

© 2020 S I Ahmed & Co. All rights reserved. powered by totalSOLUTION
Registered Office: 238 Wednesbury Road, Walsall, West Midlands WS2 9QN

We use cookies on this website, you can find more information about cookies here.