07801 250 668secretary@uckfieldchamber.co.uk

Is your Building or Construction business ready for the VAT domestic reverse charge from 1 March 2021?

The legislation has not changed since it was enacted in 2019 except for a useful alteration to the requirements placed on ‘end users’ and ‘intermediary suppliers’.

The reverse charge represents part of a government clamp-down on VAT fraud. A domestic reverse charge means that a contractor receiving a supply of specified construction services must account for the output VAT due, rather than the subcontractor who supplied the services.

A contractor also deducts the VAT due on the supply as input VAT, subject to normal VAT rules, meaning no net tax is usually payable to HMRC. The reverse charge thus removes the scope to evade any VAT owing to HMRC by the subcontractor.

The charge affects only supplies at standard or reduced rates where payments are required to be reported via the Construction Industry Scheme (CIS). It does not apply:

  • To zero-rated supplies
  • To services supplied to consumers, ‘end users’ or ‘intermediary suppliers’ who have given written confirmation of their status to their supplier in respect of the services supplied
  • To an employment business supplying either staff or workers.

Please click here for an outline of the key considerations.

Do not hesitate to contact Fl3xibooks, part of Simmons Gainsford Group on 01825 746 895 or info@fl3xibooks.co.uk for advice on strategies to help your business adapt successfully to the new regime.