HMRC have announced that due to the impact of COVID-19, the introduction of the domestic reverse charge for the construction sector and the VAT change will not now be implemented until 1 March 2021.
The new rules were an overhaul of the way that VAT is payable on building and construction invoices, to reduce fraud around this area. The new domestic reverse charge will see the customer who is receiving the service paying the VAT owed direct to HMRC as opposed to at present where the supplier was paid the VAT if they report under the Construction Industry Scheme (CIS).
The changes to the rules were originally to start in October 2019 but these were put back for a year due to concerns of the lack of preparation and impact of the changes on businesses. With the present times it has been further put back to March 2021.
An amendment to the original legislation ensures that if a business is to be excluded from the reverse charge because they are end users or intermediary suppliers, they must ensure they notify the sub-contractors in writing of this position. HMRC have said that this will ensure that both parties are clear whether the supply is excluded from the reverse charge.
However, with the date put back of these changes HMRC will still focus on identifying and tackling fraud in the construction supply chain. In addition will closely work with the sector to raise awareness plus provide additional guidance and support to ensure all businesses implement the new changes next March.
If you should need assistance around this area, then please call us on 0113 2864486.
Source: Accountancy Daily
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