The introduction of a VAT domestic reverse charge for building and construction has been delayed by 12 months and will now be implemented on 1 October 2020.
The domestic reverse charge (referred to as the reverse charge) is a major change to the way VAT is collected in the building and construction industry.
It comes into effect on 1 October 2020 and means the customer receiving the service will have to pay the VAT due to HMRC instead of paying the supplier.
It will only apply to individuals or businesses registered for VAT in the UK (although it will not apply to consumers).
This will affect you if you supply or receive specified services that are reported under the Construction Industry Scheme (CIS).
To help businesses get ready in the next 12 months, HMRC will continue to work closely with the construction sector to raise awareness and provide additional guidance and support to ensure all businesses will be ready for the new implementation date.
You need to prepare for the 1 October 2020 introduction date by:
- checking whether the reverse charge affects either your sales, purchases or both
- making sure your accounting systems and software are updated to deal with the reverse charge
- considering whether the change will have an impact on your cashflow
- making sure all your staff who are responsible for VAT accounting are familiar with the reverse charge and how it will operate
Further guidance about the VAT reverse charge can be found on GOV.UK.
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