Delay in Domestic Reverse Charge for Construction Industry to 01 October 2020
09 September 2019
HMRC has announced a one-year delay to the introduction of the VAT domestic reverse charge for building and construction services, which will come as a welcome relief for most Construction Industry Businesses.
The domestic reverse charge (which was due to come into effect on 01 October 2019) means the UK customer who gets supplies of construction services must account for the VAT due on these supplies on their VAT return rather than the supplier. HMRC intend to introduce the reverse charge as part of a government clamp-down on VAT fraud. According to the government, large amounts of VAT are lost through 'missing trader' fraud.
Despite a long lead-in time ahead of the reverse charge coming into effect, industry representatives had raised concerns that some businesses in the construction sector were not ready to implement the VAT domestic reverse charge for building and construction on 01 October 2019.
To help these businesses and give them more time to prepare, the introduction of the reverse charge has been delayed for a period of 12 months until 01 October 2020.