The proposed introduction of the domestic reverse charge for construction services, due to be implemented from 1st October 2020, has been delayed until 1st March 2021. The introduction of this legislation has already been pushed back from 1st October 2019. The intention of this further delay is to allow businesses time to overcome the challenges posed by coronavirus pandemic.
When this change comes into force, the customer receiving the qualifying construction services will be required to account for VAT due on these supplies directly to HMRC - under current legislation it is the UK supplier that is liable to account for VAT on these supplies. This VAT element is then recoverable subject to the normal rules. The aim of this legislation is to reduce the scope for fraud in the construction sector.
If you or your client operate in the construction sector and are unsure how this upcoming change will affect your business, please call our free VAT helpline for expert advice.
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