Construction Industry VAT Reverse Charge Delayed

Most VAT registered builders who are also registered for the construction industry scheme (CIS) will be aware that a fundamental change in the way they calculated and administered VAT was planned from 1 October 2019 under the new reverse charge rules. From that
date registered subcontractors would no longer charge VAT on their invoices to contractor firms.

Instead the CIS contractor would account for VAT on the full value of its sales and
purchases. In a move hailed as a ‘victory for common sense’ the Government has announced a twelve-month delay to the introduction of the domestic reverse charge citing
industry concerns and Brexit as the reasons behind the postponement. In a short briefing published via the HMRC website, the Government announced that the introduction of the domestic reverse charge for construction services would be put on ice for a period of twelve months until 1 October 2020.

You will need to understand when the reverse charge will apply to sales invoices and when it will not but thanks to the deferral you will now have time to plan and prepare for what is, for some builders, a dramatic change. If you would like to discuss how this change will affect you, get in touch with us and we can help you prepare.

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