Change in the Construction Industry
From 1 October 2019, a new procedure to account for VAT is due to take effect in the building and construction sector.
The VAT domestic reverse charge is a business to business charge, applying to VAT-registered businesses who operate through the Construction Industry Scheme. It is being introduced to tackle missing trader VAT fraud. Under the new rules, the supplier tells the recipient that the reverse charge applies, and the recipient then self-accounts for the VAT. The charge affects not just labour-only supplies, but also construction services including materials.
This major change will impact back-office procedures such as invoicing and VAT compliance. It will also affect business cash flow. Although some of the detail may change in the months to come, given the scale of the changes envisaged, it would be appropriate for businesses to start planning for them now.
Our team of experts is currently working hard to clarify how the new rules will affect our clients and how their businesses will need to accommodate the change ahead to ensure a successful transition to the new regime.
If you would like further information on the VAT domestic reverse charge for building and construction services, please contact us to request a copy of our ‘Change in the Construction Industry’ briefing document which areas of coverage include:
- Overview of reverse charge rules
- How to deal with VAT returns
- Likely impact on construction businesses
- Construction services to which the rules apply
- End users
- Invoicing for reverse charge
- Suggested planning points
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