NEWS

Reverse Charge VAT for Builders Delayed for 12 Months

Published:
25
September 2019

A major change to the way VAT is collected in the building and construction industry has been delayed until 1 October 2020.

The domestic reverse charge VAT for construction services was due to take effect from 1 October 2019.

It will put the onus on the customer receiving a service to pay the VAT element to HMRC, instead of paying the supplier.

The measure will apply to VAT-registered individuals or firms in the UK, who supply specific services under the construction industry scheme.

The domestic reverse charge aims to combat missing trader fraud in the construction sector.

Campaigners had expressed concerns that up to 150,000 businesses in the sector were not ready for the changes to be implemented next month.

To help those businesses prepare, and avoid the measure clashing with the UK’s scheduled exit from the EU, the reverse change has been put on hold for 12 months.

The Chartered Institute of Taxation (CIOT) welcomed the news, after months of calling for the reverse charge to be delayed.

It warned that implementing the measure next month may cause widespread disruption to the construction sector.

That suspicion was fuelled by a survey from the Federation of Master Builders, which found that 69% of SMEs in the construction sector had not heard of reverse charge VAT.

Linda Skilbeck, vice-chair of the CIOT’s indirect taxes sub-committee, said:

“A start date of October 2020 is more sensible.

“This should allow time for a dedicated information campaign to be operated by HMRC, with the assistance of industry and professional bodies.”

Prior to the 11th-hour U-turn, HMRC had urged those set to be affected by the change to get their houses in order by checking whether the reverse charge will affect sales, purchases or both, and telling clients or suppliers of the measure.

HMRC also advised those affected to update their accounting systems to handle the change, and consider cashflow impacts.

Get in touch for advice on reverse charge VAT.
Business news
Finsbury Robinson

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare.

Contact Us

Sign up to our
Monthly Business Newsletter

Sign up to receive our monthly Business Newsletter that will keep you up to date with everything going on in accounting, tax, and finance. 

Finsbury Robinson Services
R&D Tax
Has your company undertaken
any R&D related activities?
Find OUt More
Affected by the
Let Property Campaign?
Find OUt More
Check out our fixed price
Accounting and Business Packages
Find OUt More
Free Book-keeping
Software for all Clients
Find OUt More
Free Auto Enrolment Pensions Advice
Calculate your Contribution!
Find OUt More
Are you aware of the Capital Gains Tax Changes coming?
GDPR Compliance
CAN YOU AFFORD NOT
TO BE GDPR COMPLIANT?
Find OUt More

Sign up to our Monthly Business Newsletter

Find News Articles by Category

News HomeSME Business
Reverse Charge VAT for Builders Delayed for 12 Months
To get in touch use our Quick Contact Bar:
Show/Hide

Monday                 8:30AM – 5:30PM
Tuesday                8:30AM – 5:30PM
Wednesday          8:30AM – 5:30PM
Thursday              8:30AM – 5:30PM
Friday                 9:00AM – 12:30PM
Saturday                                 Closed
Sunday                                   Closed

Finsbury Robinson
237 Westcombe Hill
Blackheath
London
SE3 7DW